Peso seen in for more pain

THE PHILIPPINE PESO could be in for greater pain despite the country’s strong economic growth, with major money managers bearish on the currency.

Franklin Templeton Investments sees the peso falling past 55 per dollar — a drop of more than two percent — and is tactically shorting it.

Neuberger Berman reckons that steps taken by nation’s central bank don’t go far enough yet to stem a slide in Asia’s third-worst performing currency.

The peso, which reached its weakest since 2005 on Friday last week, is getting pummeled by rising oil prices, faster inflation, fiscal and current-account deficits and the broader investor turn against emerging markets.

Unlike Indonesia — a neighbor that’s also been hard-hit — the Philippines hasn’t taken enough aggressive steps to shore up its currency, says Andrew Canobi, Melbourne-based director of fixed income for Australia at Franklin Templeton.

“The Philippines twin deficits worry us particularly in this environment, where rates in the US seem to be pushing higher, and there seems to be a real contest to attract capital flows,” Mr. Canobi said.

If or when the peso hits 55, “we’d want to see what impact that would have on inflation and how the central bank’s likely to respond.”

The peso has weakened more than seven percent this year, to close at 53.88 per dollar on Monday in Manila.

The surge of more than 40% in benchmark crude prices in the past year has hurt the currency by straining the finances of a nation that imports most of its oil.

Stocks have also been hit, with the Philippine benchmark down as much as 1.7% Monday. —