![]() ![]() The peso is not the only currency weakening against the dollar, as other emerging economies in the region are also exposed to the dollar’s growing strength. In addition, rising US Treasury yields have also diverted investment away from emerging economies, further pressuring the Philippines peso’s value. ![]() The diverging monetary policies of the two countries contributed to the peso weakening against the dollar as the latter traded higher. The US Federal Reserve ( Fed) raised interest rates by half a percentage point on 4 May, after its first hike in more than three years on 16 March, when the rate was lifted by 0.25%. In contrast, the US tightened its monetary policies in 2022, raising interest rates and slowing asset purchases to counter the effect of rising inflation. Prior to 18 May, the BSP had maintained a dovish monetary policy and a record low interest rate of 2%, in an attempt to safeguard Philippines’ post-Covid economic recovery. Nonetheless, the USD/PHP rate was 8.8% higher than the same time last year. Following an interest rate hike by Bangko Sentral ng Pilipinas (BSP), the Philippines’ central bank, on 18 May, the peso’s value strengthened against the dollar and was last at 52.37 on 24 May. The USD/PHP exchange rate rose to 53.08 on 9 May, its highest level since 2 November 2018. ![]() The US dollar (USD) exchange rate against the Philippine peso (PHP) strengthened over the past month, hitting 3.5-year highs in early May as higher US bond yields diverted investment away from emerging economies. Dollar to peso forecast: Exchange rate hits 3.5-year highs Photo: whiteMocca / ![]()
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