Philippine Peso Drops Past 51 Barrier for First Time Since 2020
(Bloomberg) -- The Philippine peso dropped beyond 51 per dollar for the first time since April 2020 amid speculation the nation’s trade deficit will widen as domestic demand improves.
The peso fell as much as 0.5% to 51.27, the weakest level since March 2020. The currency is the worst performer in emerging Asia over the past month with a loss of 1.7% against the dollar.
“Into 2022, we will watch the trade deficit which may widen further as domestic demand recovers, a negative to the peso,” said Irene Cheung, a senior strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “The next barrier is 52.”
Strategists at Nomura Holdings Inc. and Barclays Plc forecast more losses for the peso in coming months due to the widening current-account deficit and a central bank that wants to keep monetary policy accommodative in contrast to the hawkish Federal Reserve.
A seasonal boost from remittances had catapulted the peso as a regional outperformer in the first three weeks of December but those flows have since dwindled.
The peso had attempted to breach the 51 barrier in late September before pulling back. Central bank Governor Benjamin Diokno said at that time authorities can “provide dollar liquidity” if there’s excessive volatility in the market.
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