Peso Hits One-Year Low Following Philippines' Credit Rating Outlook Downgrade

Photo by Bloomberg News

[Asia Economy Reporter Yujin Cho] International credit rating agency Fitch downgraded the outlook for the Philippines' sovereign credit rating, causing the peso to fall to its lowest level in a year, Bloomberg reported on the 12th (local time).

On the same day, Fitch maintained the Philippines' sovereign credit rating at 'BBB' but revised the outlook from 'Stable' to 'Negative.'

Fitch cited the impact of COVID-19 and the worsening economic growth outlook as reasons for the downgrade. Fitch stated, "The prolonged mobility restrictions due to the COVID-19 pandemic have led to a contraction in private consumption, posing a downside risk to medium- to long-term economic growth."

The downgrade in the outlook led to a sharp decline in the currency's value. On that day, the Philippine peso exchange rate fell to 50.30 per US dollar, the lowest since June last year.

Earlier, the Bangko Sentral ng Pilipinas stated at last month's monetary policy meeting that due to the prolonged impact of COVID-19, it would be difficult for the GDP growth rate to return to pre-pandemic levels until the third quarter of next year.