Philippines Peso Extends Losses for the Fourth Consecutive Quarter


Philippines Peso Extends Losses for the Fourth Consecutive QuarterThe Philippines peso plunged for the fourth consecutive quarter, the longest such decline since 2009, over fears that the current-account surplus will contract due to understating of imports.

The currency fell in March after Bangko Sentral ng Pilipinas maintained its overnight borrowing rate at a record low of 3.5 percent in a meeting held on March 27. It instead issued a directive for banks to increase the money set aside for reserves from 18 percent to 19 percent, starting April 4.

This follows earlier reports by Credit Suisse and Deutsche Bank that imports figures may have been under-reported in official data, partly due to smuggling.

“We see further peso weakness in the second quarter,” Emilio Neri, a Manila-based economist at the Bank of the Philippine Islands, told Bloomberg. “In the first quarter, the peso was playing catch-up with other currencies, monetary policy remained fairly accommodative and there were issues on trade data that could have affected sentiment.”

The peso plunged 1 percent against the greenback to 44.84 as of noon in Manila trade, based on data compiled by Tullet Prebon. The currency has declined 0.4 percent in March and remained slightly unchanged on Monday’s trade.


The peso may possibly trade against the dollar at 45.60 to 45.80 in the second quarter, which may rise to 46 if imports rise, the local economy slows down and the Federal Reserve goes ahead to cut back on monetary stimulus.

The one-month implied volatility, which measures fluctuations of the exchange rate used to value options, fell 0.58 percentage points,  or 58 basis points, to 5.97 percent in this quarter.

To contact the reporter of this story; Yashu Gola at