The Philippine peso hit a new record low, plunging to 50 pesos to a dollar on Thursday.
Finance Secretary Carlos Dominguez said the Philippine peso's breaching of the 50 pesos level against the dollar is an expected reaction of the local currency to the anticipated early rate increase by the U.S. Federal Reserve with other Asian currencies.
"We are watching the currency movement very closely. We seem to be moving in the same direction as the other currencies. We just want to avoid abrupt changes in the exchange rates," Dominguez said in a statement.
But he added that the Philippines's rock solid macroeconomic fundamentals will enable the domestic economy to survive external shocks such as higher U.S. interest rates and a stronger dollar.
Finance Undersecretary Gil Beltran, the chief economist of the Department of Finance, said the strengthening of the greenback against the peso "is expected as an impact of the Fed normalization".
The peso is just normalizing. It was 57 pesos per the U.S. dollar in 2004. All other currencies are moving in the same direction," Beltran said.
With interest rates on American government bonds now rising, the statement said investors have began shifting their focus on the United States, which means that countries like the Philippines, Malaysia, South Korea, Thailand and other Asian economies are seeing their currencies weakening against the dollar.
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