The Philippine peso took another hit on Wednesday, September 12, closing at P54.13 per US dollar — its weakest in 13 years.

Attributed to the peso’s fall is the widening of the trade deficit in July to P3.55 billion, according to analysts.

This was a huge leap from the $1.31 billion recorded in the same period last year. Imports accelerated by 32%, the fastest rate since June 2016; meanwhile, the exports grew only by a mere 0.3%.

JC Punongbayan, University of the Philippines Diliman economics PhD candidate and Rappler columnist, said the peso’s closing at P54 per US dollar is “to be expected because of the continued double-digit growth of imports and the sluggish growth of exports.”

“It could also be partly because of the recent outflow of hot money on account of increasing interest rates in the US and jitters about runaway inflation,” he added.

The rising oil prices, 6.4% inflation, fears of contagion from the emerging market rout also contributed to the peso’s decline.

“I think investors wanted more direction as to how the administration was going to address inflation from yesterday’s talk,” said Luis Limlingan of Regina Capital, referring to to the one-on-one chat that President Rodrigo Duterte had with Chief Presidential Legal Counsel Salvador Panelo.

He said that, due to the currency breaching the P54 level, the peso’s fall wasn’t surprising.

Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr, for his part, promised he would “take all actions necessary to deal with speculative activity by market participants.”

Ritchel Mendiola
Ritchel Mendiola

Ritchel Mendiola is a feature writer based in the Philippines. In addition to writing for Balikbayan Magazine, she is a news correspondent for Asian Journal News-Manila.

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