Philippine peso (PHP) Market Update
The Philippine peso (PHP) is currently showing some interesting movements, especially against the US dollar (USD), where the exchange rate has reached 90-day highs near 0.017965. This marks a 3.0% increase above the three-month average of 0.017441, reflecting a stable trading range between 0.017089 and 0.017965. Analysts have noted that the peso appears overvalued and external balances are weakening, leading to forecasts from ABN Amro, which indicate that the PHP is expected to depreciate against the USD by 2025.
Amid potential political turbulence surrounding the upcoming mid-term elections, especially following the arrest of former president Rodrigo Duterte, market sentiment may experience additional fluctuations. While mid-term elections typically don't result in drastic policy changes, political uncertainties can influence currency markets.
The broader context for the Philippines reveals ongoing challenges, particularly in relation to supply chain diversification strategies like China+1, where other Asian countries such as Vietnam and India have made significant gains. The imposition of a 17% reciprocal tariff rate by the US on Philippine goods as part of the trade tensions has further complicated the outlook.
In comparison to other currencies, the PHP to Euro (EUR) is currently at 14-day highs near 0.015899 but remains 1.3% below its three-month average of 0.016097, with volatile trading observed. The PHP to British pound (GBP) is trading at similar 14-day highs near 0.013538, aligning closely with its three-month average and demonstrating a stable range. Additionally, the PHP to Japanese yen (JPY) is at 14-day highs near 2.6045, just slightly above its three-month average of 2.584, within a stable range.
Overall, the Philippine peso's performance presents a complex picture, with a combination of external pressures and local political dynamics suggesting a cautious outlook as traders and businesses navigate through these developments.
