The local currency, the peso, it seems had partly been plagued by the fallout from last week’s geopolitical ruckus.
The Philippine peso and the Thai baht (-.75%) were the biggest losing currencies for the region this week.
The USD php rallied by a substantial 1.16% to 47.16 from last week’s 46.62.
In two weeks, the USD php rose by a hefty 1.73%. This week’s performance neutralized the previous year to date losses by the USD peso. As of Friday, the USD peso yielded .2%.
It would seem that the Phisix peso inverse correlation may have been resurrected.
In 2015 the correlation between the weak PSEi and the strong USD (weak peso) solidly played out for the entire cycle or from one inflection point (March April) to another inflection point (January 2016).
But after the turnaround in 2016 the correlation appears to have been broken. The PSEi soared by almost the same degree as with the 2014-2015 at only less than half the time from January through July. While the USD peso retrenched along with the initial surge by the PSEi, the USD peso stopped falling, began consolidating and ironically even rose along with the Phisix which raced to 8,102.
However since August the USD peso Phisix relationship appears to have been revitalized.
Present dynamics has truly been interesting. That’s because of the contradictory numbers dished out by the government. The BSP declared that July GIRs have reached record highs. The irony has been that external debt appears to be rising along with GIRs. Besides, the BSP can’t seem to unload or unwind its FX derivatives which also have been adrift at near record levels. Has the BSP been stuffing its GIRs with even more borrowed or short ‘dollars’?
Has the BSP been puffing up its GIRs to portray G-R-O-W-T-H? If the answer is yes, then the peso will fall further. Add to these the coming explosive budget and trade deficits.
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