The Philippine peso depreciated to a new record low against the US dollar, trading as low as 61.995 per dollar on Wednesday, surpassing the previous record of 61.850 set in July. This weakening was primarily driven by an increase in oil prices, which places additional pressure on the Bangko Sentral ng Pilipinas (BSP) to address market conditions.
The peso's decline was also attributed to heightened geopolitical tensions in the Middle East, which have fueled demand for the safe-haven US dollar. The Philippine stock market reacted negatively, with the benchmark PSEi shedding 106.36 points, or 1.70%, to close at 6,158.34.
The Bangko Sentral ng Pilipinas stated its policy is to intervene in the market to counter disorderly conditions and extreme volatility, especially when such conditions could accelerate inflation. Analysts suggest that the peso's continued weakness could lead the BSP to raise interest rates for a third time this year, with some expecting a 25-basis-point hike at the upcoming policy meeting on August 27. The central bank had previously increased rates by 50 basis points through two consecutive 25-basis-point hikes in April and June, bringing the policy rate to 4.75%.
