The Philippine Peso Sinks to Historic Low Against the U.S. Dollar
As the world deals with rising costs of fuel, electricity, food, and more, the Philippines is caught in the crossfire of global inflation as it closes the day at a record-low P56.99 against the U.S. dollar.
It beat the previous record back, which was set on Friday, September 2, at P56.77. The peso follows a current trend among major currencies against greenback. This is the first time since records have been tracked that the country has been on the 57 level, based on data since 2001.
The depreciating peso has only added to the Philippines troubles with inflation and shortages of sugar, salt, and more. Experts have pointed to supply chain disruptions, the invasion of Ukraine, and consumer demand as global pain points. These are also compounded by the fact that the U.S. Federal Reserve has seen more aggressive rate hikes to combat inflation. The weaker-than-expected global pandemic recovery has been a factor, too.
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According to the Bangko Sentral ng Pilipinas (BSP), inflation for August was projected to be at the 5.9- to 6.7-percent range after accelerating to 6.4 percent in July.
“Looking ahead, the BSP will continue to monitor closely emerging price developments to enable timely intervention that could prevent further broadening of price pressures, consistent with BSP’s mandate of price stability conducive to sustainable economic growth,” the regulator said in a statement.
The BSP added that the Philippines could see the peak of its inflation woes during this third quarter before it stabilizes next year.
It wrote in its August report: "Specifically, latest BSP estimates show that inflation will average 5.4 percent this year, higher than the previous estimate of 5.0 percent announced last June 23. Meanwhile, the annual inflation forecast for 2023 is 4.0 percent, lower than the previous estimate of 4.2 percent announced in June. Inflation in 2024 is expected to average at 3.2 percent, lower than the previous forecast of 3.3 percent."
The BSP also might look to further raise the key policy rate by a range of 25 to 150 bps until the end of 2022 to mitigate raising interest rates in 2023 and 2024. Domestic economic activity is expected to remain firm, as well.