MANILA - The peso weakened further against the dollar on Wednesday, hovering at its lowest level in a decade, as rising imports continued to pressure the local currency.
The peso weakened to P52.05 to the dollar in early trading from the previous day's close of P51.96. The local unit on Tuesday touched its lowest level against the dollar since July 2006.
The peso is expected to settle at the P52 level this year as the government's P8-trillion infrastructure program drives demand for imports, said BPI Securities analyst Riche Lim.
"It shouldn’t be too much of a concern. Any weakness in the peso should be offset by stronger growth in earnings, so that should be net good," Lim told ANC's Market Edge.
The peso will "stabilize" in the long run as new infrastructure helps drive economic growth, Lim said.
Budget Sec. Benjamin Diokno said Wednesday that the peso slide did not indicate a weak economy.
"We have had trouble with that in the past. What we need is a competitive peso," he said.
President Rodrigo Duterte's economic managers had said that a strong dollar would help increase the peso value of exporters' earnings and remittances from Filipinos overseas.
The Philippines posted a trade deficit of $4.02 billion in December, the largest on record for a single month, due to imports of infrastructure-related goods, according to government data.
This brought the full-year gap to $29.8 billion, from $26.7 billion in 2016, and added to the peso's losses, making it the worst performing Asian currency against the dollar this year.
"The record high trade deficit in December supports the view that PHP's (Philippine peso) weakness would also be norm as the trade deficit widens further," ING Bank economist Joey Cuyegkeng said last Friday.
-- reports from Isabelle Lee and Warren de Guzman, ABS-CBN News and Reuters