It’s hard to make a concise case for why the peso is so forlorn, given the country’s growth trending above 6 percent the past half decade. Currency analysts list a series of reasons:
- The current-account deficit is set to widen because of ambitious infrastructure plans.
- Uncertainty over the passage of tax reforms that are winding their way through the legislature.
- Political upheavals such as President Rodrigo Duterte’s war on drugs are harming sentiment.
- Battles between government troops and Islamic State-linked militants in the southern city of Marawi have prompted additional caution among investors, and the cost of the military activity is putting pressure on the budget deficit.
“When you’re looking at other currencies in the region, it’s less appealing from that perspective,” said Stephen Innes, head of trading for Asia Pacific with Oanda, in an interview in Hong Kong on Aug. 17. “You have the current account increasing, the waves of instability in the political landscape, and it just becomes the local whipping boy.”