By Aaron Michael C. Sy, A reporter
The PHILIPPINE PESO slipped to a record low of P59.44 per dollar At Wednesday’s close, the failure to sustain support was seen late last year due to renewed demand for the greenback amid tensions in the country.
The local currency fell 9.9 centavos from Tuesday’s close at 59.341, according to data from the Bankers Association of the Philippines posted on its website. The closing broke the previous record low of P59.355 on Jan. 7.
The peso opened Wednesday’s trading session weaker at P59.38 against the dollar. Its intraday best was P59.35, while its worst showing was at P59.45 against the greenback.
Dollars traded reached $951 million on Wednesday from $999.2 million on Tuesday.
Demand for the greenback continued on Wednesday amid geopolitical concerns stemming from tariffs imposed by US President Donald J. Trump against Iran and its trading partners, a trader said by telephone.
The trader also cited increasing bets on a few rate cuts by the US Federal Reserve this year.
This is as the Trump administration threatened Fed Chairman Jerome H. Powell with criminal charges for his testimony before the US Senate regarding the renovation of the Fed headquarters in Washington, DC.
The peso was also dragged down by the local government’s reduction in its infrastructure spending target this year, Rizal Commercial Banking Corp. economist said. Michael. L. Ricafort said in a Viber message.
The Department of Budget and Management has cut its infrastructure spending to 4.3% of gross domestic product (GDP) this year from 5.1% previously following a slowdown in government spending and economic growth last year due to the flood management scandal.
The lower target means P1.3 trillion in infrastructure spending, Acting Budget Secretary Rolando U. Toledo said on Tuesday.
Mr. Ricafort noted that the peso moved between normal areas on Wednesday, indicating possible intervention from the central bank.
“So far, the signs have been consistent with that [the Bangko Sentral ng Pilipinas (BSP) has] he has been intervening for the past months and at least for more than three years already. So, these are normal levels because the previous record high for more than three years was P59,” he said. Money Talks with Cathy Yang on One News on Wednesday.
AIA Investment Management Philippines CEO Angie L. Pacis said in the same program the peso could test the P62 level due to the growing interest rate differential between the Philippines and the US.
“We are actually of the camp that, at the moment, based on what we see, maybe the rate cut in February is actually iffy, because the BSP is already within 2-4% of them. [inflation] target,” he said.
BSP Governor Eli M. Remolona, Jr. last week he said that the reduction of the rate at the meeting of the Monetary Board of Feb. 19 is “still on the table” but “impossible.” He also noted that the BSP is nearing the end of their easing cycle.
The Monetary Board has brought in 200 basis points of reductions from August 2024, bringing the policy rate to a three-year low of 4.5%.
On Thursday, the trader said that the market players will wait for the development of the subpoenas of Mr. Trump against Mr. Powell.
The peso may also be weighed by US producer inflation data which is expected to remain high and may drive Fed hawkish expectations, a trader said. Data will be released overnight.
The trader sees the peso moving between P59.20 and P59.60 per dollar on Thursday, while Mr. Ricafort expects it to go from P59.35 to P59.55.
