December 28, 2024 | 12:00am
MANILA, Philippines — The peso closed the year on a weaker footing compared to its finish in 2023 amid global uncertainties, including concerns on US economic policy under president-elect Donald Trump and persistent geopolitical tensions.
Based on data from the Bankers Association of the Philippines, the local currency depreciated by P2.475 to end yesterday’s trade at 57.845 to $1 from the end-2023 level of 55.37 to $1.
On the last trading day of 2024, the peso gained 12.5 centavos from Thursday’s 57.97 to $1.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), said one of the major concerns of market players this year is the impact of protectionist policies potentially pursued by the US government once Trump is formally inaugurated into office.
This could lead to fewer rate cuts from the US Federal Reserve, which could possibly affect the policy decisions of the Bangko Sentral ng Pilipinas (BSP) as well, Ricafort said.
The BSP reduced the target reverse repurchase rate by 25 basis points to 5.75 percent during its last policy meeting on Dec. 19. This latest adjustment brings the total rate cuts to 75 basis points since the Monetary Board began easing in August.
The local currency has bounced back to the 57 to $1 handle this week after slumping by as much as 6.2 percent to hit a record low of 59 to $1 last seen on Dec. 19.
Ricafort also attributed the weaker peso this year to geopolitical tensions, including those in the Middle East, which caused investors to shift to safe haven currencies such as the dollar.
On the other hand, the seasonal increase in remittances from overseas Filipino workers (OFWs) and export sales in the fourth quarter provided some support for the peso exchange rate especially toward the end of the year, based on the consistent patterns for many decades.
“The seasonal surge in OFW remittances and conversion to pesos for holiday-related spending could continue possibly towards the New Year celebrations, in view of the upcoming long holiday weekend,” he said.
BAP data showed that the local currency opened at 57.85 yesterday. Its intraday best was at 57.7 while its worst showing stood at 57.89 against the dollar.
Trading volume went down by 13.6 percent to $1.52 billion on Friday from $1.76 billion on Thursday.
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