The Philippine Peso hit another all-time low after the stock market crashed to Php 50.42 = 1 USD. According to market analysts, political developments may have made investors cautious; falling amidst the rise of other Asian countries this year.
In a Manila Bulletin article, it said that the peso hit the lowest of lows in ten years. This was after allegations of President Duterte’s involvement in extra-judicial killings and corruption in his former post surfaced. In a text message sent by PRRD spokesman Ernesto Abella to Bloomberg, the peso decline is driven by the US Federal Reserve expectations to increase interest rates. The peso is currently 1.3% down from last year while the Korean won is Asia’s biggest gainer at 4.5% increase.
Technical indicators suggest that the worst is yet to come. Before the peso gets better, it will continue to decline after reaching the support level against the dollar in the previous month. The overseas funds have sold $122.1 net equities for the year, with around $83.4 million inflow seen through 2016.
Joey Cuyegkeng, a senior economist, said: “You have a whole bunch of political developments recently that when you put it all together, people outside will probably say ‘wait, let’s be cautious here’.“ I expect some recovery in sentiment once all these political concerns are addressed, but it will take a while.”
Aside from the extra-judicial killings, the accusations of amassing 2 billion pesos illegally, the Leila De Lima persecution and the suspended war on drugs were the major reasons on the apprehension of investors to bank on the Philippines. Still, Duterte keeps a high popularity rate despite clear concerns raised by economists and finance advocates.