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Peso hits 8-year low of 50:US$1

24 November 2016

AFP file photo
The Philippine peso has sunk to Php50 to the US$1 in mid-trading today, Thursday, Nov. 24. It was the lowest level for the peso since closing at 49.99 to US$1 on Nov. 20, 2008.
Reports attributed the decline to an expected rate hike by the US Federal Reserve next month.
However, analysts have already forecast that the peso would close at 50:1US$ before the year’s end. It has been declining steadily in value since the second half of this year, when foreign investors started pulling out of the country after the election of President Rodrigo R. Duterte.
But the decline slowed down recently, as cash remittances from overseas Filipinos started pouring into the country, and a stronger-than-expected gross domestic product (GDP) growth of 7.1 percent was recorded for the third quarter.
Bangko Sentral ng Pilipinas Governor Armando M. Tetangco, Jr. has attributed the weakness of the peso and other emerging market currencies to the sustained strength of the US dollar.
 “Basically, the weakness in emerging market currencies is due to dollar strength. And why is that so? Because of expectations that interest rates are going to rise in the US. And because as the [incoming Trump] administration pushes for increased spending and more rapid economic growth, that may result in higher inflation and therefore higher interest rates. Because of that, we are seeing the flow of capital out of emerging markets and back to the United States,” Tetangco told reporters. - from reports in Manila

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