Philippine peso drops to fresh record low as BSP says February rate cut on table

The Philippine peso declined to a new record low after the central bank signaled an interest-rate cut and as traders assessed its tolerance for a weaker currency.

The peso fell as much as 0.2% to 59.34 per dollar on Wednesday. It breached the previous record low of 59.26, which it hit in late October.

“The peso is under pressure following the dovish Bangko Sentral ng Pilipinas (BSP) comments and the relatively relaxed stance on its recent depreciation trend,” said Wee Khoon Chong, senior APAC market strategist at BNY.

Bearish momentum for the peso is growing after the central bank signaled on Tuesday that it isn’t too worried about currency weakness and that more interest-rate cuts could be coming. The currency has been under pressure for months as a government corruption scandal sapped investor confidence and hurt economic growth.

When asked if there’s a risk the peso will hit a new record low this year, BSP Governor Eli Remolona on Tuesday said the central bank doesn’t look at levels. Instead, monetary authorities “look at whether — if the peso depreciates at all — whether the depreciation is sharp enough” to impact inflation, he said.

Mr. Remolona also said a rate cut is on the table in February.

Lower growth prospects, weakening current-account balance and deterioration of investor sentiment are all weighing on the peso in the short-term, Chong said. — Bloomberg