MANILA - The peso touched the P50 to the dollar level on Wednesday as Asian currencies weakened after Moody's downgraded China's debt rating.
The peso declined by as much as 0.3 percent from the previous session, it's biggest drop in two weeks, making it the region's worst-performing currency for the day. It closed at P49.995.
Analysts said President Rodrigo Duterte's declaration of martial law to contain Islamic extremists in the south could further dampen investor sentiment.
Moody's Investors Services downgraded China's long-term local and foreign currency issuer ratings citing expectations that the financial strength of the world's second-biggest economy would dwindle in the coming years.
The move took a toll on Asian stocks as it heightened concerns over tighter regulation, rising borrowing costs and signs of an economic slowdown in China.
Asian shares excluding Japan were about 0.3 percent lower, despite gains on Wall Street overnight.
"It's quite clear that it's going to be quite negative in terms of sentiment, particularly at a time when China is looking to derisk the banking system, as well as at a time when there's going to be some potential restructuring of SOEs (state-owned enterprises)," said Vishnu Varathan, head of economics and strategy at Mizuho Bank's Treasury.
The Chinese yuan eased 0.04 percent, making its fourth session of decline in the past five days.
However, analysts believe currencies whose economies are dependent on exports to China could show signs of stress during the session.
"To some extent yen may be affected. Some commodity related currencies in the region too: the IDR (Indonesian rupiah), for example; and the (Philippines) peso," said Saktiandi Supaat, head of FX research at Maybank in Singapore.
The yen and the rupiah were both marginally off.
The Thai baht was 0.1 percent lower ahead of a central bank policy meeting later in the day where the Bank of Thailand is expected to stand pat on its benchmark interest rate of 1.5 percent. -- with ABS-CBN News