Peso back to ‘57 vs $1’ territory | Inquirer Business

Peso back to ‘57 vs $1’ territory

/ 02:26 AM October 29, 2022

The Philippine peso returned to the 57:$1 territory after lingering at 58:$1 and weaker in the past five weeks, as local authorities moved to shore up the local currency’s position against the US dollar, which itself has gone through some corrections.

The local currency closed on Friday at 57:97:$1 after firming up to as strong as 57:82 during the trading day.


This happened after President Marcos’ comment last week that the government was ready to “defend” the peso, considering that further weakness could exacerbate high inflation.

Such statement from the President was followed by similar comments from both Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla and Finance Secretary Benjamin Diokno about preventing the peso from depreciating or weakening too much.


Diokno said the government could intervene in the foreign exchange market with $10 billion from the BSP’s international reserves.

Personal opinion

The finance chief clarified that this was his personal opinion rather than a policy sanctioned by the Monetary Board, of which he is one of seven members.

Meanwhile, Medalla said the BSP might match an expected 0.75-percentage-point hike in the policy rate of the US Federal Reserve, which might be announced at the next meeting of their Federal Open Market Committee, Nov. 1 to Nov. 2.

They hope that keeping a one-percentage-point difference between the policy rates of the BSP and the US Fed would help arrest the downslide of the peso as higher rates make the US dollar stronger.

While non-American currencies appear to be gaining against the greenback, ING Bank said the US dollar was also “having one of its deepest corrections of the year.”

Corrective forces

ING Bank said the latest readout on US gross domestic product growth—accelerating to 2.5 percent in the third quarter of 2022—could feed the corrective forces currently at work for the dollar.

“However, some high US inflation data … and what should be a hawkish Fed next week should contain the depth and length of this dollar correction,” the Dutch bank added.


Also, ING Bank noted that the latest of the Bank for International Settlements’ triennial foreign exchange survey showed the US dollar retained its dominant status in global foreign exchange transactions.

On Friday, the peso appreciated for the fourth day in a row, by 25 centavos to close at 57.97, which was the strongest in more than a month or since 57.48:$1 on Sept. 20.

This month, the peso hit its record weakest position of 59:$1 four times—Oct. 3, 10, 13, and 17.

“For the month of October, the dollar-peso exchange rate finally corrected lower, after rising for eight straight months, by 65.5 centavos or 1.1 percent,” said Michael Ricafort, chief economist at Rizal Commercial Banking Corp.

Ricafort said the stronger peso has been largely brought about by the expected seasonal increase in OFW remittances and conversion to pesos that are needed to finance travel and other holiday-related spending ahead and during the long holiday weekend.

“The US dollar also corrected lower against major global currencies to new one-month lows after improved global market risk appetite as stock markets [here and abroad] came from new one-month highs,” he said.

The economist added that the peso also continued to appreciate while global crude oil prices still lingered near nine-month lows or since Feb. 3 before Russia invaded Ukraine.

“Recent signals of local policy rate hikes, alongside other measures, would all help support and stabilize the peso exchange rate and overall inflation,” Ricafort said.

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