The peso slipped further against the US dollar at the end of the trading week, hitting a three-month low as investors took positions in the greenback in reaction to the recent downward revisions to the Philippines’ economic forecasts and an uptick in inflation.
The local currency dropped to P44.13 to $1 on Friday, reflecting a loss of 5 centavos or 0.1 percent from the previous day’s P44.08 finish. Friday’s rate marks the weakest level reached since May 8, when the peso traded at P44.19.
Justino Calaycay, analyst at the Accord Capital Equities Corp., said the latest World Bank projection for the local economy showing a cut in its growth forecast, as well as the inflation rate, were the reasons for the drop in the value of the peso on Friday.
“The WB lowered its growth forecast and others may soon follow.
Inflationary pressures have also increased—a new power rate hike, Iraq tensions, etc. Prospects of a further shift in the yield curve could have had an impact, too,” Calaycay said in a text message to The Manila Times.
Washington-based World Bank said its growth projections for the country were revised downward to 6.4 percent from 6.6 percent for 2014 and to 6.7 percent from 6.9 percent for 2015. Its estimates fell below the government’s growth targets of between 6.5 percent and 7.5 percent for 2014 and between 7 percent and 8 percent for 2015.
The institutional lender also said food price increases are likely to push the average inflation rate to 5 percent this year. The peso closed at P44.13 on Friday, shedding 5 centavos or 0.1 percent from the P44.08 close in the previous day’s trade, the lowest level reached since May 8, when the peso traded at P44.19.
On Thursday, the peso lost 37 centavos, or 0.8 percent, hitting a seven-week low. Total volume transacted Friday at the Philippine Dealing System amounted to $1.380 billion, higher than the $1.331 billion on Thursday.