Peso Sept. 2 2022
Image Credit: BSP | File | Gulf News

Manila: The peso further weakened this week, sliding to Php56.79 vs the US dollar Friday, giving a windfall for the millions of migrant Filipino workers who remit money home.

The downward movement means higher exchange for remittances sent by overseas Filipino workers who, in effect, get an extra Php738 for every $100 they remit today, compared to year-ago level of $49.41 vs $1 (on July 7, 2021).

In the last two weeks, the local currency further lost value against the greenback, from Php55.856 August 19, to Php55.979 on August, central bank data shows.

On September 2, the reference exchange rate bulletin published by the Bangko Sentral ng Pilipinas (BSP) shows it offered to buy the US currency at Php56.150 while it sold at Php56.650.

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The latest rate beats the 17-year low recorded on July 22, 2022 when the peso sid to Php56.295 vs $1.

Traders expect the Asian currency’s further weakening amid a number of factors: rising imports, US Federal Reserve interest rate hike, and high global oil prices.

Like many countries around the world, the Philippines faces skyrocketing inflation due to supply issues and high fuel cost.

Inflation trigger

Experts warn that combined with an increase in current account deficit, the peso's weakening will make a higher-than-expected inflation a feature of the economy for the rest of 2022.

A weaker peso exchange rate also raises the peso value of the government's foreign debts and loans, potentially bloating the national debt in terms of the local currency.