The Philippine peso dropped further as the conflict in Syria added to the uncertainties brought by the possible tapering of the United States Federal Reserve’s stimulus program.
The local currency closed P44.75 to a dollar on Wednesday shedding 25 centavos from P44.50 per dollar on Tuesday’s close.
Jonathan Ravelas, chief market strategist at Banco de Oro, said that with the Wednesday’s close, the peso level may break further to P45 to P45.30 a dollar.
“These event decreases the chance of our original year-end target of P42.10,” he said, adding that the peso target will most likely be revised higher closer to P43.50 or P44 to a dollar.
The government has set the peso assumption for the full year at P41 to P43 to a dollar. In a recent statement, Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said that the peso is moving in line with the regional trend.
“Again, this is being caused by the uncertainty about the recovery in the US economy as well as the action of the Fed [US Federal Reserve] with respect with the asset purchase program. The peso is not moving in a way that is inconsistent with what we can see with other currencies,” he said.
Tetangco added that foreign exchange policy remains the same, to allow the peso to respond to market forces but with scope for BSP participation in the market to avoid excessive volatility in the exchange rate.