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Philippine Peso Slides to 2009 Low as Duterte Unnerves Investors

Liau Y-Sing
Updated

(Bloomberg) -- The Philippine peso sank to a seven-year low as investors remained concerned about the policies of President Rodrigo Duterte and shied away from emerging-market assets before oil producers meet this week.

Global funds sold Philippine stocks for a 22nd straight day amid nervousness about the fallout from Duterte’s anti-drug war and his outbursts against the U.S. and the United Nations. Philippine central bank Governor Amando Tetangco last week sought to soothe investors last week spooked by Duterte’s rhetoric. The Turkish lira, peso and Malaysian ringgit led a drop in developing-nation currencies Monday as markets awaited the U.S. presidential debate.

The peso’s decline is “mainly due to politics with the Philippine president’s ongoing war on drug dealers and his intent to seem to alienate all of their major trading partners,” said Jeffrey Halley, a market strategist at Oanda Asia Pacific Pte in Singapore. “Any rally would be quite short-lived in the peso this week just until the political situation clarifies a lot more. We also have the first U.S. presidential debate coming up and I think it’s quite a big event that hasn’t really been priced by the market.”

The peso tumbled 0.5 percent to 48.245 per dollar as of 11:11 a.m. in Manila, according to Bankers Association of the Philippines data compiled by Bloomberg. It reached 48.260, the lowest since September 2009 and is Asia’s worst-performing currency in the past three months with a 2.7 percent drop.

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S&P Global Ratings warned last week of “rising uncertainties surrounding the stability, predictability, and accountability” of Duterte’s administration. It said the “stability and predictability of policy making has diminished somewhat” citing the president’s pronouncements on foreign policy and national security.

To contact the reporter on this story: Liau Y-Sing in Kuala Lumpur at yliau@bloomberg.net. To contact the editors responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net, Naoto Hosoda, Shikhar Balwani

©2016 Bloomberg L.P.