Philippines: Philippines peso weakens to over-five-year low
August 21, 2015
In August, the Philippines peso (PHP) weakened against the U.S dollar, continuing a trend that began in mid-May. On 21 August, the currency traded at 46.58 PHP per USD, which represented the weakest value since 2 July 2010. The result was 3.1% weaker than on the same day of the previous month and 6.2% weaker on an annual basis. The currency has lost 4.0% of its value since the beginning of the year.
The recent depreciation of the peso was driven by several factors. On the one hand, it reflects that the U.S. dollar is strengthening on the back of rising expectations of an U.S. interest rate hike by the Federal Reserve anytime soon. On the other hand, remittances growth slowed in the Philippines in the first months of this year compared to the strong growth rates observed in past years, which is likely to lead to a lower current account surplus. In addition, foreign selling of Philippine stocks increased, adding pressure on the currency. Nevertheless, despite the depreciation, the Philippines peso performed more robustly than several other emerging-market currencies in Southeast Asia, which showed great volatility after the depreciation of the Chinese yuan on 11 August.