The peso tumbled Tuesday to a new 44-month low of 54.265 against the US dollar in line with regional currencies’ weakness following the hike by the US Federal Reserve.
The peso traded weaker than its Monday’s closing of 54.065 against the greenback. It was the local unit’s weakest level since it settled at 54.32 a dollar on Oct. 4, 2018. Total volume turnover hit $1.389 billion on Tuesday.
“The peso exchange rate again [was] weaker vs the US dollar for the fifth straight trading day, by 0.20 or 0.4 percent,” Michael Ricafort, chief economist of Rizal Commercial Banking Corp., told Manila Standard via email.
“[The] peso is also weaker ahead of the local budget deficit data, recent continued hawkish signals from some Fed officials, and ahead of Fed chair Powell’s semi-annual monetary policy testimony to the US Senate Banking Committee on June 22, 2022,” Ricafort said.
The Bangko Sentra ng Pilipinas said the balance of payments position incurred a deficit of $1.61 billion in May on government’s payment of foreign debt.
“The BOP deficit in May 2022 reflected outflows mainly from the national government’s foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenditures,” it said in a statement.
The BOP deficit in May brought the cumulative level in the first five months to $1.53-billion deficit, lower than the $1.63-billion deficit recorded in the same period last year.
“Based on preliminary data, this cumulative BOP deficit reflected the trade in goods deficit, which was partly offset by inflows such as from personal remittances, net foreign borrowings by the national government, foreign direct and portfolio investments,” the BSP said.
The gross international reserves declined to $103.65 billion as of end-May from $105.4 billion in April. The BSP said the GIR level continued to represent a more than adequate external liquidity buffer equivalent to 8.7 months’ worth of imports of goods and payments of services and primary income.
It was also about 7.4 times the country’s short-term external debt based on original maturity and 4.7 times based on residual maturity.
The BSP earlier revised the BOP deficit target this year to $6.3 billion from the previous estimate of $4.3-billion deficit amid the buildup in external risks, most notably the aggressive monetary policy normalization in advanced economies, the slowdown in China, the war between Russia and Ukraine and the lingering COVID-19 pandemic.