By means of Luisa Maria Jacinta C. Jocson, Reporter
THE RETURN of Donald J. Trump as US president could cause Asian currencies such as the Philippine peso to weaken, analysts said.
“We suspect that Asian currencies would underperform under a Trump presidency, even if they don’t appear toFworse than others by the apparent increase in his chances of winning lately,” Capital Economics said in a report.
The peso closed at P58.225 per dollar on Monday, strengthening by 9.5 centavos from its P58.32 Ffinish on Friday.
Last week, the local unit for the dollar fell to the level of P58 per dollar Ffirst time since August 2nd.
“Moreover, that increase coincided with an increase in the chances of a Trump election victory, if we can believe the prediction markets. And his policies could represent a particularly strong headwind for Asian currencies,” Capital Economics said.
Republican candidate Trump has included tough trade restrictions in his proposed policy, with a view to imposing tariffs of 60% or higher on all Chinese goods, as well as a universal tariff of 10% or even 20%.FF.
Analysts pointed to the peso’s potential weakness during Trump’s presidency.
“If Republicans win the election, raising tariffs and closing borders to immigrants could mean higher inflation and higher interest rates in the U.S., which could support the strength of the U.S. dollar,” said Emilio S. Neri, Jr., chief economist at the Bank of the Philippine Islands.
Michael L. Ricafort, chief economist of Rizal Commercial Banking Corp., said markets are already pricing in a Trump victory that has led to a strengthening of the U.S. dollar against other major global currencies.
“Any Trump victory could lead to higher U.S. profitsFamid a possible trade war that could lead to higher tariffsFF-tariffs on imports from China and other countries, stricter immigration rules that could increase labor costs in the US, budget shortfalls for possible tax cuts and economic stimulus,” he said.
Trump will face Democratic candidate Vice President Kamala Harris in the US presidential elections on November 5.
“Any Trump presidency would lead to more protectionist policies that could potentially slow down global trade, similar to the current situation Ffirst Trump administration, and could also slow foreign direct investment, OFW remittances with stricter immigration rules,” Mr. Ricafort said.
The latest data from the local statistical authority shows that the United States remained the top destination for Philippine-made goods in August. It recorded an export value of $1.22 billion, accounting for 18.1% of total imports during the month.
In the FIn the first eight months, remittances rose 2.9% to $22.22 billion, compared to $21.58 billion a year earlier. The United States accounted for almost half, or 41.3%, of total remittances during this period.
Capital Economics noted that Trump’s campaign rhetoric is “unlikely to translate directly into policy.”
“But tariffs are one of the easier parts of Trump’s agenda for him to implement. And the region’s central banks are unlikely to do so Flight depreciation pressure if he does. So our feeling is that Asian currencies could still be in for a rough ride Trump would prevail,” it added.