Peso back at P56:$1

With a stronger US dollar, the peso again depreciated past P56 on Monday, Aug. 22, to P56.21 from its Friday close of P55.93.

The peso hit an intraday high of P56.22 after opening at P56.10. Monday’s weighted average was at P56.107, based on the Bankers Association of the Philippines’ spot market monitoring.

Last week, the peso was ranging ever closer to P56 despite that the Bangko Sentral ng Pilipinas (BSP) added another 50 basis points (bps) to the policy rate on Aug. 18, which raised the key rate to 3.75 percent from 3.25 percent.

The BSP has been adjusting benchmark rates higher and intervening in the exchange market to stabilize the peso vis-à-vis the US dollar.

The peso was last at the P56 level last month and even climbed to an intraday high of P56.45 on July 12 which was its weakest level since October 2004, during the Arroyo administration.

The peso broke past P53 last June 10. By June 17, it depreciated further to P54 and then to P55 last June 29. The peso hit P56 on July 7.

The country’s exchange rate policy supports a freely floating exchange rate system where the BSP leaves it to market forces to dictate the exchange rate level. The BSP will only enter the spot market to ensure “order and temper destabilizing swings” in the peso-US dollar rate.

Meantime, the BSP does not release any forecasts for the exchange rate, but for the purpose of setting the national government budget, the government and the BSP has a peso-dollar rate assumption of P51 to P55 until 2024.