Philippines: Philippines peso weakens to over-five-year low
September 17, 2015
In September, the Philippines peso (PHP) weakened against the U.S. dollar, continuing a trend that began in mid-May. On 7 September, the currency traded at 47.03 PHP per USD, which represented the weakest value since 25 May 2010. The result was 2.6% weaker than on the same day of the previous month and 8.0% weaker on an annual basis. The currency has lost 5.0% 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 on eventual rise in U.S. interest rates. 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 and China’s financial markets’ turmoil in August. After hitting the over-five-year low on 7 September, the peso strengthened slightly, trading at 46.64 PHP per USD on 17 September.