Peso movement vs Dollar is in line with other Asian currencies

Peso movement vs Dollar is in line with other Asian currencies

- in Economy, Life, News
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Finance Secretary Carlos Dominguez III said the Philippine peso’s breaching of the P50 level against the dollar is an expected reaction of the local currency to the anticipated early rate increase by the US Federal Reserve, with other Asian currencies also moving in the same direction.

“We are watching the currency movements very closely. We seem to be moving in the same direction as the other currencies. We just want to avoid abrupt changes in the exchange rates,” Dominguez said.

But he added that the country’s rock solid macroeconomic fundamentals will enable the domestic economy to survive external shocks such as higher US interest rates and a stronger dollar.

Undersecretary Gil Beltran, the DOF’s chief economist, said the strengthening of the greenback against the peso “is expected as an impact of the Fed normalization.”

“The peso is just normalizing. It was P57 per the US dollar in 2004. All other currencies are moving in the same direction,” he said.

With interest rates on American government bonds now rising, investors have began shifting their focus on the United States, which means that countries like the Philippines, Malaysia, Korea, Thailand and other Asian economies are seeing their currencies weakening against the dollar.

The Hongkong and Shanghai Banking Corp. (HSBC) has lowered its forecast for the Thai baht to 35.70 to the dollar by year-end, down from an earlier forecast of 34.60.

In an earlier report, the Wall Street Journal said “the Japanese yen dropped to its weakest levelin five months against the dollar even though Japan’s economy grew at a better-than-expected rate of 2.2% in the third quarter.”

It reported that “the yen was last down 0.8% at 107.49, continuing its slide since the U.S. election outcome sparked a broad-based rise in the dollar against major currencies.”

“The Indonesian rupiah, Korean won and Indian rupee were among several emerging-market currencies to suffer against the U.S. dollar (last week), while China’s central bank set the yuan at a more than seven-year low versus the greenback in mainland markets,” the Wall Street Journal reported.

According to the Financial Times, the Indonesian rupiah and Thai baht recorded a decline of 0.4 percent, while China’s renminbi weakened to more than Rmb6.9 per dollar, marking a more than 10 per cent drop since August last year.

The Japanese currency was a further 0.2 per cent weaker on Thursday at ¥112.69 per dollar.


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