Philippine peso completes worse month in 16 years, weighed down by Duterte’s rants
The Philippine peso completed its biggest monthly decline since October 2000 amid the biggest outflow from the nation’s stocks in a year.
The investor exodus prompted by President Rodrigo Duterte’s expletive-laden outbursts has pushed the currency to a seven-year low and made it Asia’s worst performer in September. Duterte has lashed out at US President Barack Obama and told off both the European Union and the United Nations for their criticisms of his violent anti-drug campaign, which has left more than 3,000 people dead.
The peso fell 0.3 per cent Friday and 3.9 per cent this month to 48.50 per dollar, its weakest close since September 2009, according to data from the Bankers Association of the Philippines.
The nation’s equities gauge declined 2 per cent in September as foreigners pulled US$274.2 million from local shares.
The currency has slumped even as data showed the Philippine economy grew at the fastest pace after India in the second quarter. Officials including central bank Governor Amando Tetangco have said the nation’s fundamentals are strong, and the currency’s decline is partly due to bets that the Federal Reserve will raise US interest rates.
The Finance Department said in a statement this week that a weaker peso will boost the value of two key drivers of growth: money repatriated by Filipinos working abroad, and outsourcing revenue.
“Given the still strong economic fundamentals of the Philippines, we expect the peso to rebound and trade higher than 48 per dollar by year-end,” said Paolo Magpale, treasurer at BDO Private Bank Inc. in Manila. “It’s a general risk off sentiment. Everything is getting hit. There’s a possibility that offshore investors are taking profits here, where valuations have been rich.”
The median forecast of strategists compiled by Bloomberg calls for the peso to climb to 47 versus the greenback by end-December, which would make it the best performer among Asian currencies.