Peso may extend drop on Philippine rating risk

Bloomberg

July was a brutal month for the Philippine peso and there appears to be little respite on the horizon. After capping its steepest monthly decline in over three years, the currency could extend losses due to a worsening virus outbreak and the risk of a sovereign rating downgrade. It may drop towards 51 per dollar, a level last reached in April 2020, according to ING Groep NV, Security Bank Corp and Malaysian Banking Bhd.
The peso’s resilience is being tested as the authorities struggle to contain the spread of the delta variant and slowing economic growth erodes government revenue. Volatility in the currency has increased, suggesting that traders could be bracing for more downside. “We do see the peso on the back foot from here on as growth will likely take a hit from the delta variant, while investors become more worried about the fast deteriorating fiscal metrics,” said Nicholas Mapa, economist at ING in Manila.