The peso sank to a seven-year low and stocks declined, as investors pulled money from the nation’s assets amid concerns about President Duterte’s policies.
Global funds sold Philippine stocks for a 22nd straight day amid nervousness about the fallout from Mr. Duterte’s antidrug war and his outbursts against the US and the United Nations.
Central bank Governor Amando M. Tetangco last week sought to soothe investors spooked by President Duterte’s rhetoric. The peso led a drop in developing-nation currencies along with the Turkish lira and South Korean won on Monday ahead of the US presidential debate and a meeting of oil producers this week.
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 US 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 48.240 per dollar as of 1:40 p.m. in Manila, according to Bankers Association of the Philippines data compiled by Bloomberg. It reached 48.260 earlier, the weakest since September 2009, and has lost 3.9 percent over the past month, the worst performance in Asia.
In about three months on the job, the Philippine leader has used expletives in talking about US President Barack Obama and vowed to end cooperation with the US military in both fighting terrorism and patrolling the disputed South China Sea. He’s moved to boost economic and defense ties with China and Russia.
S&P Global Ratings warned last week of “rising uncertainties surrounding the stability, predictability and accountability” of the Duterte administration. It said the “stability and predictability of policy-making has diminished somewhat,” citing the president’s pronouncements on foreign policy and national security.
The Philippine Stock Exchange index dropped 1 percent to 7,644.23, after rallying 2.3 percent last week, the most in more than two months. The yield on 10-year government bonds surged 37 basis points to 3.94 percent, the highest since mid-July, according to the midday fixing from Philippine Dealing and
Exchange Corp.
“The weakness in the region and political concerns are driving some investors to take profit,” said Rafael Palma Gil, a portfolio manager at Rizal Commercial Banking Corp. in Manila. S&P’s statement may have contributed to the slide in stocks, he said.
International investors sold a net $5.6 million of Philippine shares on Friday, the 22nd straight day of outflows. They have pulled $350 million so far this month, the most in a year.