Peso-Dollar Closing Rate: An Analysis of the 18th April 2024 Exchange Rate
The world of foreign exchange is a complex and ever-changing landscape, with rates fluctuating due to a myriad of factors. On the 18th of April 2024, the Peso-Dollar exchange rate saw some interesting movements. Let’s delve into the details, causes, and implications of this rate change.
The Exchange Rate
On the 18th of April 2024, the Philippine Peso (PHP) weakened against the United States Dollar (USD), closing at P57.184. This rate was a continuation of a trend that had been observed for five straight days, and it was over the government’s P55-57:$1 exchange rate assumption for 2024.
Causes of the Rate Change
The depreciation of the Peso against the Dollar can be attributed to several factors:
Geopolitical Tensions: The current depreciation run has been attributed to rising geopolitical tensions. Markets were rattled after Iran launched hundreds of drones and missiles against Israel in retaliation for an alleged airstrike by Israel on the Iranian consulate in Syria.
Monetary Policy: The US Federal Reserve’s signals of rate cut delays also contributed to the Peso’s depreciation. The market’s anticipation of when the Federal Open Market Committee (FOMC) will ease has led to the weakening of other currencies against the US Dollar.
Inflation: The stubborn US inflation rate has postponed the expected easing of the FOMC. The Fed hiked its fund rate by 525 basis points from March 2022 to July 2023 to 5.25-5.5%.
Implications of the Rate Change
The depreciation of the Peso has several implications:
Remittances: The depreciation will benefit families of Filipinos working abroad as they will receive a bigger amount when their earnings are converted from USD to PHP.
Imported Goods and Services: The depreciation will make foreign goods and services more expensive.
National Debt: The country’s debts could also increase as a result of the depreciation.
Monetary Policy: The Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. stated that the magnitude of the adjustment of the Peso has not been large enough to affect inflation expectations. Therefore, the impact on monetary policy is not large.
In conclusion, the Peso-Dollar exchange rate on the 18th of April 2024 was influenced by a combination of geopolitical tensions, monetary policy, and inflation. The implications of this rate change are far-reaching, affecting remittances, the cost of imported goods and services, the country’s debts, and monetary policy. As we move forward, it will be interesting to see how these factors continue to play out in the foreign exchange market.