Palace: PBBM closely monitoring weak peso with economic managers

President Ferdinand “Bongbong” Marcos Jr. is closely monitoring the continued weakening of the Philippine peso against the US dollar, Malacañang said on Tuesday.

“The President is in constant touch with the economic team and they are closely monitoring this,” said Press Secretary Trixie Cruz-Angeles in a Palace briefing.

“As you know, the inflation rate isn’t due to any local factors. It’s really about the exchange rate. But, it is a matter for the President, which the President closely monitors on a regular basis,” Cruz-Angeles added.

On Tuesday, the peso exchange rate fell to a new record low against the US dollar.

The peso exchange rate was lower for the fifth straight day, up for the eighth day in nine days, by 0.49 or 0.8 percent to close at the new record low of 58.99, with a new intraday record low of 58.999.

The peso rate has opened weak at 58.80, with a high of 58.90, a low of 58.70, and latest at 58.85.

“Amid the continued increase in the dollar against major global currencies; due to Fed signals of another large 0.75 Fed rate hike on November 2022, total Fed rate hikes of 1.00-1.25 for the rest of 2022; as higher US interest rates/bond yields increase the attractiveness of the dollar with high-interest rate income on US currency-denominated bonds instruments,” chief economist Michael Ricafort of Rizal Commercial Banking Corp. told Daily Tribune.

For instance, the benchmark 10-year US Treasury yield reached a new 12-year high of 3.93 percent on September 26, now at 3.83 percent, he said.

Since the start of 2022, the peso already depreciated by a total of P7.99 or 15.7 percent (against 50.999 by end-2021).

The economist added that local monetary authorities signaled possible surprise local policy rate hike/s, and more intervention in the local foreign exchange markets, both of which could help stabilize the peso exchange rate as well as overall inflation.

“The peso also weaker after the local stock market, the PSEi, declined for the fourth straight trading day, down for the ninth day in 10 days, by 239.47 points or 3.8 percent [the biggest daily decline since March 14] to close at 6,020.07, the lowest in nearly two years or since October 20, 2020,” Ricafort said.

Sentiment on the peso and local financial markets was also weighed down by Super Typhoon “Karding’s” damage, especially on agriculture, which could lead to some pick-up in food/agricultural prices and overall inflation. The IMF also reduced its Philippine GDP growth estimate for 2022 to 6.5 percent from the previous 6.7 percent, added Ricafort. with Raadee Sausa

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