Fierce Peso Defense Shows 1997 Crisis Still Haunting Philippines
- Central bank has been defending currency at 59 against dollar
- Peso headed for the biggest annual decline since 2008
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An intense battle to stem currency declines in the face of dollar strength is reminding some emerging markets of the trauma inflicted by the 1997 Asian financial crisis. Just ask authorities in the Philippines.
Fearing a weaker peso could fuel inflation and spark social unrest, Bangko Sentral ng Pilipinas has unleashed aggressive intervention in recent weeks to prevent it from sliding past 59 against the greenback. As Southeast Asia’s worst performer plunged 11% this year, the government has declared the 60 level as a no-go area. However, forecasts compiled by Bloomberg show some bearish strategists predicting a slump of almost 8% to 62 by June.