The Philippine peso (PHP) continues to face downward pressure amid a complex mix of domestic and international factors. The recent 17% reciprocal tariff imposed by the US on Philippine goods as part of a broader trade confrontation is shaping expectations. Analysts suggest that this development could further weaken the peso, casting doubt on its strength moving forward.
Currently, the PHP to USD exchange rate stands at 0.017510, approximately 1.6% below its three-month average of 0.017803. This range has remained relatively stable between 0.017458 and 0.018069. Forecasts from ABN Amro highlight concerns about the peso's valuation, suggesting potential depreciation against the dollar through 2025 due to weaker external balances.
In the context of political developments, the arrest of former President Rodrigo Duterte for alleged crimes against humanity has sparked discussions on the implications for the upcoming mid-term elections. While mid-term elections generally do not result in significant policy changes, this situation may create increased political volatility, potentially impacting market sentiment and currency stability.
Additionally, the Philippine currency's performance against other key currencies reflects a similar trend. The PHP to EUR has dipped to a 7-day low of 0.015058, notably 3.1% under its three-month average of 0.015537. The PHP to GBP also mirrors this trend, trading at 0.013055 which is 1.3% below its average. Conversely, the PHP to JPY has seen a slight increase, trading at 2.6057, about 1.1% higher than its three-month average.
Overall, the outlook for emerging Asian currencies, including the PHP, appears to be waning, particularly as the Philippines has not significantly capitalized on the China+1 strategy that has benefitted other regional peers like Vietnam. Given the current tariff impositions and rising political risks, market participants should closely monitor these developments for potential impacts on currency exchange rates and international transaction costs.
