Philippine peso reels from typhoon damage, hits near 3-month low

BENGALURU: The Philippine peso slipped on Wednesday to its lowest in almost three months, leading losses among emerging Asian currencies and extending its fall since a typhoon barrelled into the island nearly two weeks ago, while most stock markets cut early losses.

Currencies came under pressure from safe-haven flows buoying the greenback as risk sentiment slightly eased. The Indonesian rupiah dropped 0.3%, followed by the Malaysian ringgit and Singapore’s dollar, both down 0.1%.

The peso fell for a third straight day, weakening 0.7% to 50.980 per dollar. It has lost about 1.6% since Dec. 16, when Typhoon Rai caused widespread economic damage and displaced more than 400,000 people.

The typhoon also disrupted the country’s vaccination drive, which is already among the slowest in Southeast Asia.

“We expect this year’s peso underperformance to sustain until the third quarter of 2022... which is a result of the Philippines lagging the vaccination recovery relative to the rest of Asia,” Bank of America analysts wrote in a note. “Consequently, growth, inflation and the balance of payments may remain challenging into the new year, especially amid rising energy prices.”

Philippines’ trade deficit ballooned to $4.02 billion by October, which has held back the peso’s gains throughout the year.

Meanwhile, the rupiah eyed its worst session in almost two weeks. The currency had gained around a percent over the past fortnight and seemed to be on a technical correction course.

Among stock markets, South Korea tracked weakness in the Nasdaq to drop almost 1%, while Malaysia dipped 0.1% after five straight sessions of gains.

The Kuala Lumpur index is the only one in the region that is set to end the year in negative territory.

Philippine and Jakarta shares reversed course to trade up 0.7% and 0.1%, respectively, as lack of headlines and low trading volumes kept markets a bit directionless towards the end of the year.

Shanghai stocks fell 0.9%, while the yuan eased as the city of Xian, with 13 million people, entered its seventh day of lockdown to combat a COVID-19 outbreak.