(Bloomberg) — The Philippine peso has fallen above the closely watched 57 pesos to the dollar level for the first time since late 2022, putting pressure on the central bank to join emerging market nations in supporting the country’s currency.
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On Wednesday, the peso fell by as much as 0.5% to 57.29 pesos to the dollar, its lowest since November 2022. On the same day, Governor Eli Lemolona said that central banks tend to tolerate currency adjustments unless there are very sharp fluctuations. He said on Monday that he was satisfied with the current level of the peso and that the central bank had little intervention in the foreign currency market.
Lemolona described 57 as a “weak support level,” meaning it is not a key focus for authorities. However, Prime Minister Remolona suggested in September that authorities were intervening to defend the peso to prevent further depreciation, and its level remains under scrutiny.
“The central bank needs to at least smooth out the volatility,” said Michael Ricafort, chief economist at Rizal Commercial Bank in Manila. The next key support level would be $1=$57.70, he said.
The move comes as tensions in the Middle East rise, and after a series of alarmingly high inflation rates prompted Federal Reserve Chairman Jerome Powell to signal that policymakers would wait longer than previously expected to cut interest rates. , the US dollar has regained strength in recent days.
Central banks in emerging countries are increasing their support for their currencies. South Korean authorities are increasingly wary of the won’s depreciation, with Bank of Korea Governor Lee Chang-yong calling the recent move a bit excessive.
(Updated with central bank governor’s comment in second paragraph.)
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