The peso closed weaker at P52.32 vis-à-vis the US dollar on Tuesday, March 8, it lost 14 centavos during the day, still on account of higher energy prices due to the ongoing Russia-Ukraine war.
The local currency hit an intraday low of P52.34 from Monday’s close of P52.18.
The weighted average rate posted by the Bankers Association of the Philippines (BAP) was P52.195 versus P52.061 on Monday. The total volume of foreign exchange trades decreased to $1.33 billion from $1.58 billion of the previous day.
The peso breached the P52 level on March 7 and fell to a 30-month low as the Russia-Ukraine war has been affecting foreign exchange pricing and increasing currency volatility.
BDO Research said the further depreciation of the peso will continue to test the P52.50 to P53 levels in the next days. It noted previously that they see a trading range between P52.15 to P52.30 levels in the near term but this has been easily breached on Tuesday.
The last time the peso was at the P52 level was on Sept. 26, 2019 when it depreciated to P52.11, closing exchange rate. Intraday, the peso depreciated to P52.18 on Sept. 27, 2019.
The Russia-Ukraine war has led to volatility in oil and commodity prices due to supply fears and rising inflation across the globe, including in the Philippines.
The government has an exchange rate assumption of P48 to P53 from 2022 to 2024. This assumption is for the purpose of budgeting.
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno on Sunday, March 6, said the impact of the Russian-Ukraine war on the foreign exchange rate is muted.
He said the peso has continued to trade sideways versus the US dollar, with a “slight depreciation pressure.”
“The BSP views such development as a result of the impact of the geopolitical tensions on oil prices, which likewise affected the peso. But this is in line with the behavior of other currencies in the region which also depreciated against the US dollar. It should be noted, however, that the Philippines has more than adequate level of foreign exchange reserves to temper any volatility in the exchange rate market,” said Diokno.
Diokno reiterated that the country’s external sector is supported by structural inflows from overseas Filipino remittances, receipts from business process outsourcing, and foreign direct investments which have shown resilience even amidst the pandemic. “In addition, the BSP has various liquidity-enhancing tools that can be deployed in case the domestic liquidity situation becomes unexpectedly tight or disorderly including actions adopted during previous crises episodes,” he also said.
As of end-February, the country’s US dollar reserves amounted to $108 billion.
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