THE Philippine peso breached the P54-per-dollar level on Monday, marking the currency’s worst performance since October 31, 2018 when it closed at P53.535:$1.
The peso plunged 0.85 percent or 45 centavos on Monday, June 20, to close at 54.005.
The local currency’s depreciation against its US counterpart to a fresh three-year low follows the Federal Reserve’s most aggressive rate hike in nearly three decades, propping up the dollar.
Last week, the US central bank hiked its key rate by 75 basis points, the largest increase since 1994, in a bid to fight multi-year high inflation stateside.
The plunging peso also adds pressure on the Bangko Sentral ng Pilipinas to be more aggressive in its rate hikes to stem the currency’s slump.
A weak peso could make imports more expensive for the Philippines, which is already grappling with high oil prices amid the Russia-Ukraine war.
The peso may continue to depreciate versus the dollar this week on dovish hints from central bank officials ahead of its review and despite an aggressive rate hike by the US Federal Reserve.
The Monetary Board will meet on Thursday to decide on its latest policy decision.
Rate hikes usually help temper the currency’s weakness by making local yields more attractive to foreign investors.