On September 13, the Philippine Peso hit the P54 mark over the US dollar.
This the lowest exchange rate the peso has reached in over 13 years. The lowest the peso has ever been was P54.155 to US $1, back on December 2, 2005.
The Bangko Sentral ng Pilipinas (BSP) has been actively resisting the peso dip through the foreign exchange market. On Tuesday, September 11, the rate reached P53.94 to $1 before going to $54 the next day.
As of the writing of this post, the current exchange rate is at P54.17 to $1.
How did this come about?
Global financial market analysis firm BMI Research already predicted the Peso dip based on their research last June.
“We see the next level of possible backstop at around P53.70/USD, followed by at approximately P56/USD if the support fails to hold,” BMI announced.
They said, however, that they remain neutral despite the bearish prediction, as the strong money remittances from OFWs might have helped offset the Peso to Dollar exchange. This did not come to pass and, as the predicted dip in the Peso to Dollar exchange has inevitably happened.
“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,” JC Punongbayan, 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.”
The dip in the peso-to-dollar exchange rate is also caused by the high inflation rate of up to 6.4% for this year, as well as increasing oil prices.
Bank of the Philippine Islands (BPI) lead economist Jun Neri stated that oil prices in the global market are still expected to rise. For the inflation to see an improvement, Neri said the oil global market price has to drop at least $60 to $65 per barrel, he told Rappler.