The Philippine peso fell to a record low against the dollar on Friday as rising imports widened the June trade deficit to an all-time high of $5.84 billion while the dollar remained strong.
The peso depreciated 10% this year, falling to 56.90 against the dollar. The currency is the third worst performer in Asia this year after the Japanese yen and the South Korean won Bloomberg.
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What happened: Along with the widening trade deficit, the peso is being negatively impacted by a divergence in central bank policies. The Philippine central bank has indicated that it is likely to slow the pace of rate hikes, while the US Federal Reserve is raising interest rates quickly to fight inflation.
take experts: Trinh NguyenSenior Economist at Natixis SA In Hong Kong, Bloomberg said, a hawkish Federal Reserve is also putting pressure on the peso, meaning the central bank must respond with jumbo hikes to stem the slide. “We see further weakness in the peso as imports rise while exports are dragged down by weaker Chinese demand, widening the trade deficit,” Nguyen said.
