Remit or wait?: Peso drops further to Php57.99, an all-time low
Manila: Wednesday saw a new low for the Philippine peso versus the US dollar at Php57.99 per US$1 — a record exchange rate that favours overseas Filipino workers remitting money home.
Based on the official reference exchange bulletin on September 21, 2022, the Bangko Sentral ng Pilipinas (BSP) was selling US dollars for Php57.75, a record high.
The Bankers Association of the Philippines (BAP), on the other hand, recorded a weighted average rate of Php57.839 per dollar during Wednesday morning trade, with total volume of $563.9 million recorded by noon.
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The afternoon BAP rate and volume for September 21 was not yet available as of this posting. On Tuesday, the opening rate of the peso versus the dollar was Php57.4, BAP data shows. Monday's $508.4 million in trades increased to $967 million on Tuesday.
The Federal Reserve hinted at the likelihood of another super-sized policy rate hike in a meeting on Wednesday (Thursday in the Philippines) in order to curb inflation in the US — a hawkish stance that has caused the greenback to increase in value even further against most currencies.
The peso has lately hit new all-time lows as a result of the dollar's continuous appreciation due to the sustained increase in the US Federal Reserves policy rates.
In 2021, overseas Filipino workers (OFWs) remitted $31.4 billion, accounting for about 9% of the country’s gross domestic product, after hitting an all-time high of $33.5B in 2019, central bank records show.
Yuan, Asian stocks slide
China's yuan weakened to a 26-month low, as investors braced for an expected hefty interest rate hike from the Fed.
Asian stocks also lost ground, with Manila's benchmark index dropping more than 2% to lead losses among regional peers, while shares in Kuala Lampur and Mumbai declined 0.8% each and Jakarta equities fell 0.9% to a three-week low.
The US central bank is set to announce its rate decision later in the day, with rate futures traders pricing in an 81% chance of a 75 basis point hike and a 19% probability of a 100 bps tightening.
The dollar hovered near a two-decade peak against a basket of currencies, after yields on U.S. Treasury notes, a rough gauge of rate expectations, leaped ahead of the Fed decision.
Rising yields strengthen the dollar, increasing the appeal of Treasury notes and the greenback, in turn weighing on riskier Asian