Peso July 12
On Tuesday (July 12, 2022) the peso closed at 56.35 against the US dollar, the peso's weakest since November 2005. Image Credit: BSP | Gulf News

Manila: Remitters from abroad get more bang for their buck as the peso kept it downward spiral, hitting a 17-year low against the US dollar and the UAE dirham on Tuesday (July 12, 2022).

The peso closed at Php56.37 against the ascendant greenback and Php15.3824 against the UAE Dirham (Dh) Tuesday, brushing the all-time low of Php56.45. The slide gives millions of overseas Filipino workers earning in dollars, or a currency pegged to the dollar, more value in the local currency.

The Bangko Sentral ng Pilipinas (BSP)’s reference exchange rate bulletin shows the dollar closing at Php55.947 on Tuesday, though the central monetary authority was selling the greenback at Php56.250.

Check the latest forex and gold rates here.

The Philippine peso is now a hair’s breadth away from all-time lows against both currencies, as it slid for the second straight trading day this week, and nearly 10% since January.

On Tuesday, the peso lost 39.1 centavos, closing the trading day at Php56.37, from Php55.979:$1 close at the Philippine System on Monday.

The peso stood at Php56.357 in March 2004, before weakening further on November 5, 2004 when it closed at Php56.375 vs. $1.

On July 12, 2022, the peso actually touched an intra-day low of P56.45 vs. $1 — a record against the US dollar last hit by the peso on October 14, 2004.

Trigger for peso’s drop

Analysts said the peso’s slide was triggered in part by latest data showing the May trade deficit widen further.

Back in 2004-2005, the lowest level was capped at Php56.40, and stayed at those levels for about two years.

The US dollar has gained against major currencies around the world — hitting parity with the euro on Tuesday, the first time in 20 years.

Dollar’s rise vs major currencies

The euro zone continues to feel the effect of a continuing spike in natural gas prices and the war in Ukraine.

The Japanese yen has also slid further against the US dollar amid the Federal Reserve’s aggressive moves to flight inflation with policy rate hikes.

More policy rates are expected in the US, with the Fed hinting at a possible a 75-basis-point rate increase in its next meeting.

The Bangko Sentral ng Pilipinas (BSP) has raised rates by only a total of 50 basis points so far this year. Last week, Felipe Medalla, the BSP Governor, hinted that the central Monetary Board could raise policy rates by 50-basis-points during the next meeting, set on August 18, 2022.

Higher interest rates means higher borrowing charges for businesses as well as auto and housing loans.

The country's current account balance is expected to see wider deficits in 2022 and 2023 than the original forecast on account of higher fossil fuel import bills.

On Tuesday, oil retailers implemented a major price rollback at the pumps, marking the second straight week of price cuts.