The Philippine peso (PHP) has come under pressure recently, influenced by a combination of domestic and international factors. The US government's imposition of a reciprocal 17% tariff on goods from the Philippines as part of ongoing trade tensions has raised concerns regarding the peso's stability. Analysts posit that these tariffs could exacerbate the already weak external balances of the Philippines, contributing to a potential depreciation of the PHP against the US dollar (USD) in the near term.
Recent forecasts from ABN Amro suggest that the peso is currently overvalued and may continue to weaken against the USD into 2025. This sentiment appears to be reflected in current exchange rates, with PHP to USD trading at 60-day lows around 0.017453—1.7% below its three-month average. The PHP has also seen declines against other major currencies, including the euro (EUR) and the British pound (GBP), both hitting 90-day lows as well. The PHP to EUR is noted at 0.015154, which is 4.0% beneath its three-month average, while PHP to GBP is at 0.012945, 3.2% lower than its recent average.
Political developments within the Philippines could further complicate the peso's outlook. The arrest of former president Rodrigo Duterte has created a climate of political uncertainty ahead of the upcoming mid-term elections. While such elections traditionally do not lead to drastic policy changes, the incident could still impact market sentiment and investor confidence.
Moreover, the broader landscape for emerging Asian currencies is deteriorating amid persisting trade woes following new tariffs on China. The Philippines has not significantly benefited from the regional push toward supply chain diversification, unlike competitors such as Vietnam and India, particularly within the electronics sector.
Overall, while the peso currently trades within a relatively tight range, the interplay of tariffs, political developments, and regional currency trends suggests a challenging environment ahead for the PHP. As such, individuals and businesses engaging in international transactions may wish to remain vigilant and consider market forecasts moving forward.
