{"id":19687,"date":"2024-07-10T03:01:10","date_gmt":"2024-07-10T03:01:10","guid":{"rendered":"https:\/\/energybuzz.ph\/staging\/6915\/peso-may-slide-to-p591-if-bsp-cuts-early\/"},"modified":"2024-07-10T03:01:10","modified_gmt":"2024-07-10T03:01:10","slug":"peso-may-slide-to-p591-if-bsp-cuts-early","status":"publish","type":"post","link":"https:\/\/energybuzz.ph\/staging\/6915\/peso-may-slide-to-p591-if-bsp-cuts-early\/","title":{"rendered":"Peso may slide to P59:$1 if BSP cuts early"},"content":{"rendered":"
\n

By Luisa Maria Jacinta C. Jocson, <\/b>Reporter<\/i><\/p>\n

THE PESO may breach the P59-per-dollar level if the Philippine central bank cuts rates as early as August, Fitch Solutions\u2019 unit BMI said.<\/p>\n

\u201cIn our view, we think that such an early cut remains out of the question, even if price pressures ease,\u201d Shi Cheng Low, BMI Asia country risk analyst, said in a webinar on Tuesday.<\/p>\n

If the Bangko Sentral ng Pilipinas (BSP) cuts in August, Mr. Low said this would mean that the central bank is \u201cpractically signaling that they are giving up currency stability in exchange for economic growth.\u201d<\/span><\/p>\n

An August rate cut could also lead to the peso breaching the P59-per-dollar level and possibly even hitting the P60 mark, he added.<\/p>\n

The peso had reached a record low of P59 against the dollar in October 2022, prompting BSP intervention in the foreign exchange markets and a rate hike.<\/p>\n

BMI said the biggest barrier to the BSP\u2019s monetary easing is currency stability.<\/p>\n

\u201cThe Philippine peso has emerged as one of the poorest performing currencies in the region. As such, the BSP will be extremely mindful of a preemptive return to policy easing for fear of exacerbating weakness in the already weak peso,\u201d Mr. Low said.<\/span><\/p>\n

The peso has been trading at the P58-per-dollar range since May. The central bank has attributed the peso\u2019s weakness to safe-haven demand for the dollar amid geopolitical tensions as well as hawkish signals by the US Federal Reserve.<\/p>\n

\u201cI think that currency stability will be the biggest constraint going forward and that will depend if the BSP is willing to give up on that to support the economy at least this year,\u201d Mr. Low said.<\/p>\n

BMI expects the BSP to only begin cutting rates in October this year for a total of 50 basis points (bps) for 2024 and 150 bps in 2025.<\/p>\n

BSP Governor Eli M. Remolona, Jr.<\/span> has said that the central bank can begin its easing cycle by August. While the BSP monitors the movements of the Fed, he has insisted its moves are independent of the US central bank.<\/span><\/p>\n

\u201cWith the governor keeping the door open for monetary loosening in August, policy makers are holding a dif<\/span>ferent view from us. They are signaling the peso weakness would not be the deciding factor to policy easing,\u201d Mr. Low said.<\/p>\n

\u201cAs such, the BSP could very well surprise us with a cut next month if inflationary pressures recede faster than we currently expect,\u201d he added.<\/p>\n

Mr. Low cited recent measures that would help further tame inf<\/span>lation, such as the recent executive order that slashes tarif<\/span>fs on rice imports.<\/p>\n

\u201cOur estimates show that the tariff cut can lower headline inflation by up to 1.3 percentage points over the coming months. This will, however, take some time before its full impact feeds through to rice prices,\u201d he said.<\/span><\/p>\n

President Ferdinand R. Marcos, Jr.<\/span> last month issued an order slashing rice import tarif<\/span>fs to 15% from 35% until 2028 in a bid to bring down prices of the staple grain.<\/p>\n

Meanwhile, Mr. Low also noted the impact of an August rate cut on the economy would be seen in the fourth quarter.<\/p>\n

\u201cIf there\u2019s a rate cut in August, then monetary transmission will go through and we\u2019ll see some form of it or some impact of it materializing down maybe in the fourth quarter and we\u2019ll see investment pick up once again, which obviously supports the Philippine economy.\u201d<\/span><\/p>\n

\u201cBut let\u2019s just say if they cut in October, then it might be slightly too late for its impact to materialize this year at the very least,\u201d he added.<\/p>\n

The economy grew by 5.7% in the f<\/span>irst quarter. The government is targeting 6-7% growth this year.<\/p>\n

Second-quarter gross domestic product data will be released on Aug. 8.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

THE PESO may breach the P59-per-dollar level if the Philippine central bank cuts rates as early as August, Fitch Solutions\u2019 unit BMI said.<\/div>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","footnotes":""},"categories":[1],"tags":[4061,5796,14644,2527,170,18690,15718,12455],"class_list":["post-19687","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-early","tag-bsp","tag-bworldonline","tag-cuts","tag-may","tag-p591","tag-peso","tag-slide"],"yoast_head":"\nPeso may slide to P59:$1 if BSP cuts early - Energy Buzz<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/energybuzz.ph\/peso-may-slide-to-p591-if-bsp-cuts-early\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Peso may slide to P59:$1 if BSP cuts early - 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