The Philippine peso declined to a record low of P61.75 against the US dollar on Wednesday, matching a level previously seen in late April. This weakness is primarily attributed to a surge in oil prices, which have risen over 20% this month, and the potential impact of the El Niño weather phenomenon on agricultural production. The Bangko Sentral ng Pilipinas (BSP) reportedly intervened in the foreign exchange market by selling dollars to cushion the peso's fall.
Analysts anticipate further depreciation, with Philip McNicholas, Asia sovereign strategist at Robeco Group, suggesting the dollar-peso rate could exceed P62 in the near term. He highlighted the peso's vulnerability in the current global context, especially with El Niño's potential negative effects on Asian agriculture. The Philippines, being heavily reliant on oil imports, faces a widening current-account deficit due to higher crude prices. The central bank is under increasing pressure to defend the currency, which has already weakened by over 4% this year, making it one of Asia's worst-performing currencies.
The peso's record low was also recorded on Thursday, remaining at P61.75 against the greenback. This stability, despite surging global crude prices and expectations of a US Federal Reserve rate hike, was likely due to the BSP's intervention to manage market volatility. Brent crude futures, for instance, reached $97.87 a barrel, their highest since June 3, while US West Texas Intermediate climbed to $89.63, the highest since June 11, amid escalating hostilities between the United States and Iran and fears of oil transit disruptions.
