MANILA – The Philippine peso touched its lowest level in over 11 years as it closed at P51.98 to the dollar on Tuesday.
The local currency fell to 52 to the dollar earlier in the day before recovering in later trading.
This was the peso’s weakest level since July 2006 and has made it the worst performing Asian currency against the dollar this year.
An analyst last week said the peso could slide to P53 by the yearend considering the negative influence of huge money outflow, Bangko Sentral ng Pilipinas’ (BSP) steady interest rates and the BSP’s “dovish” inflation estimates.
Analysts have also pointed to the surging trade gap driven in part by imports of goods tied to the government’s ambitious infrastructure push.
The trade deficit ballooned to $4.02 billion in December, a record for any month, from $3.84 billion in November according to the Philippine Statistics Authority.
That brought the full-year gap to $29.8 billion, from $26.7 billion in 2016.
This has led some economists to suggest the Philippines could be vulnerable if higher US interest rates spark capital outflows from Asia.
But BSP Governor Nestor Espenilla, has dismissed this view citing the Philippines’ strong remittances, exports and outsourcing contracts.
— with a report from Reuters