Peso drops past 64 to the dollar: Manila braces for higher power and fuel prices

What happened

The peso closed at 64.17 per US dollar on Tuesday, 22 centavos weaker than the day before, The Philippine Star reported. During trading it briefly hit 64.20, the weakest level in its history. It only broke through 63 on October 15; it took just twelve days to pass the next mark.

Radio network Bombo Radyo attributes the slide mainly to the strong dollar, saying any recovery depends on global markets. A surprise 0.5 percentage point rate hike by the central bank the previous week has not stopped the fall either.

High oil prices and the threat of El Niño add to the pressure. Economists at Chinabank and BPI expect inflation of close to or above 8 percent in October and November, and third-quarter growth of only around 3 percent.

The mood on the ground

Energy Secretary Sharon Garin spelled out on Tuesday what the weak peso means for households: imported coal, diesel and liquefied natural gas become more expensive, and that passes through to electricity bills. Her department will check with the regulator whether increases can be delayed or softened. She half-jokingly said it was not the best time to be secretary.

Drivers and commuters face higher prices at the pump; the department is considering asking oil companies again to stagger price hikes. In Metro Manila, power rates already rose this month because of dollar-linked contracts, according to The Philippine Star.

Not everyone sees only gloom: an HSBC economist told The Manila Times the weak peso is a bitter pill that could help the economy in the long run, making exports cheaper and giving families of overseas workers more pesos for every dollar sent home. But he concedes that rising living costs can eat up that gain.

Voices from the media