Philippine Peso Falling Trajectory Defies Rate Hike Expectations

The Philippine peso is likely to sink to new lows against the dollar as the country’s outsized vulnerability to high energy costs offsets expected interest rate hikes, analysts said.

Bangko Sentral ng Pilipinas is estimated to raise policy rates by up to 100 basis points this year, Sumitomo Mitsui Banking Corp. said, a move that would normally support the peso. Yet rising import costs from higher oil prices, stemming from the US-Iran war, are weighing on growth and the trade balance, strategists at Sumitomo Mitsui, BNY, and MUFG Bank said.