(March 16): The Philippine peso weakened towards the key psychological level of 60 pesos per dollar, prompting the central bank to intervene to support the currency.
The currency fell as much as 0.3% to 59.94 per dollar on Monday to head for a record low. It pared losses after governor Eli Remolona Jr said Bangko Sentral ng Pilipinas (BSP) was intervening in the foreign-exchange market.
“Since the dollar is down, I assume some intervention can push the peso back down below 60,” Remolona said in response to a Bloomberg query.
The move underscores the vulnerability of the peso to rising energy costs, a key risk for investors tracking Philippine assets, as the country relies heavily on imported fuel. Brent crude rose more than 1% to about US$104 a barrel, extending gains to a fourth day as the Iran conflict showed few signs of easing.
“We maintain a negative view on the peso, driven by elevated oil prices, a deteriorating current account balance, and dovish expectations for BSP policy,” Wee Khoon Chong, a strategist at BNY, wrote in a note. “Technically, initial support is at 59, while 60 round figures serve as the next key resistance level.”
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Persistently high oil prices above US$100 a barrel could trigger a rate hike, the governor had said in an interview with Bloomberg Television on March 6, before Brent crude surged past that level.
Before the escalation of the Iran conflict, government and central bank officials had already flagged the 60-per-dollar level as a key threshold. President Ferdinand Marcos Jr does not want the peso to weaken to 60 against the dollar, his press officer said in January. A day later, Remolona signalled that the central bank could “probably” allow the currency to reach that level if there were no sharp market moves.
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