The Philippine peso is at its lowest since 7 years ago but while the exchange rate is averaging around Php48.25 per dollar, some analysts believe that it will soon reach the Php50 per dollar mark.
According to BMI Research of Fitch Ratings, the weakening peso could continue to drop and reach Php50 per dollar if Pres. Rodrigo Duterte continues his tirades against the US and possibly also the European Union (EU), causing “deteriorating investor sentiment”.
Aside from cursing US President Barack Obama and the EU for commenting against the controversial drug wars and the alleged extra judicial killings in the Philippines, Duterte also threatened to end the joint military exercise and war games between the Philippines and the US.
But while he heavily criticized the US and EU, Duterte shows leaning towards creating alliances with both China and Russia, known for being US rivals. It is believed that these could also cast doubts in the minds of investors, whether it was risky or safe enough to still invest in the Philippines.
BMI Research disclosed, “In the event that these fears translate into something more tangible leading to prolonged political uncertainty, we believe that a further slide of the peso beyond 50 to US dollar could be likely.”
But while the weakening peso could have an impact on the country’s economy, not everyone is sad about it. In fact, many overseas Filipino workers are actually rejoicing the higher exchange rate.
Finance Secretary Carlos Dominguez said that the ‘slightly weak’ peso is a big help to overseas Filipino workers – and Budget Secretary Benjamin Diokno agrees, saying that the weak peso boosts the value of dollar remittances.
So, what do you think of the peso heading towards the Php50/$1 exchange rate?
I have a love-hate relationship with the peso weakens. As an American living in the Philippines, I like it, but for the Filipino people who I dearly love, I feel for them.