MANILA (UPDATE) - The Philippine peso settled at P55.06 to the dollar at the end of Wednesday’s trading, according to the Bankers Association of the Philippines.
This was the weakest that the peso has been in more than 16 years.
Since the start of the year, the peso has been losing ground versus the greenback. It started the year at P50.99 to the dollar.
Bangko Sentral ng Pilipinas Managing Director Zeno Abenoja said the depreciation of the peso will benefit some sectors like exporters and OFWs, but other sectors will be negatively affected including importers.
"Kailangan mas marami silang maipon na piso para mabayaran ang kanilang import obligations. At kung nagiging mas mahal ang imports, pwede rin itong mag translate into higher domestic prices," he said.
(They will need more pesos to pay their import obligations. And if imports are more expensive, this can also translate into higher domestic prices.)
Abenoja however also said the Philippines has "structural dollar flows" to help stabilize the economy. These are remittances from overseas Filipinos, BPO receipts, income from foreign tourists, and foreign direct investments.
"Pwedeng tumaas, bumaba ang palitan ng piso sa dolyar, pero maasahan rin naman natin itong mga tinatawag natin 'structural dollar flows" para sumuporta sa ating foreign exchange," said Abenoja.
(It can go up or down but we can also rely on ‘structural dollar flows’ to support our foreign exchange.)
He also said the BSP will monitor the market-determined exchange rate.
Incoming Bangko Sentral ng Pilipinas Governor Felipe Medalla on Tuesday downplayed the depreciation of the peso saying this was caused by the strengthening of the US dollar.
“This is mainly due to the fact that the US monetary authority (the FED) has hiked its policy rate by 150 basis points (1.5 percent),” Medalla said.
Medalla also said the BSP would “participate in the market to address excessive short-term volatility.”
Meanwhile, Philippine share prices also fell, with the PSE index losing 42.22 points or 0.67 percent to close at 6,303.19 and the All Shares index losing 11.56 points or 0.34 percent to close at 3,389.12.