Peso sinks to fresh record low of 61.64:$1

MANILA, Philippines — The peso slumped to a new record low yesterday as pressure from a stronger dollar and elevated US interest rates was compounded by domestic political uncertainty, keeping investors cautious.

Data from the Bankers Association of the Philippines showed the peso closed at 61.64 per dollar yesterday, weaker by 26 centavos from Wednesday’s 61.38 finish.

The latest close surpassed the previous record low of 61.567 recorded on April 29.

The local currency opened at 61.35, which was also its strongest level for the day, before weakening to as much as 61.66, its weakest intraday level during the session.

Trading volume declined by about 12.5 percent to $1.58 billion from $1.8 billion previously.

A trader said the peso weakened after a stronger-than-expected US producer inflation report reinforced expectations that the Federal Reserve may keep policy rates elevated for longer.

“The peso reached record lows after the stronger than expected US producer inflation report amplified views that the Fed might not be able to deliver rate cuts this year despite Kevin Warsh’s confirmation as the next US central bank chairman, replacing Jerome Powell,” the trader said.

Still, the second trader said the peso could recover slightly ahead of a potentially weaker US retail sales report overnight, with the exchange rate likely to move between 61.50 and 61.75.

Meanwhile, a second trader said the peso’s latest decline reflected broader concerns beyond the usual pressure from a strong dollar and elevated US interest rates.

“The peso is no longer reacting to just a strong dollar and high US rates. The latest move suggests markets are also pricing in a higher political and uncertainty premium, especially as the peso underperformed regional peers,” the trader said.

Domestic political risks have come into focus after reports that Sen. Ronald dela Rosa, who is wanted by the International Criminal Court, had left the Senate premises after seeking refuge there.

This came as the House of Representatives transmitted the articles of impeachment against Vice President Sara Duterte to the Senate for trial, adding to uncertainty at a time when the peso is already under pressure from external shocks.

The second trader added that volatility could remain elevated in the near term, with the peso potentially testing the 62-per-dollar level if risk sentiment worsens.

“The Bangko Sentral ng Pilipinas still has enough credibility and reserves to prevent disorderly swings,” the second trader added.