Excitement, in a slightly negative way, stained the otherwise boring financial markets as the news of Vice President Sara Duterte’s leaving the official family of President Marcos’ administration reverberated throughout the country.
I fully agree with the observation of Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona that the country’s market has the “culture of Marites,” short for “Mare, anong latest?”
This Filipino slang is used in reference to a person, typically female, who is excessively talkative, chatty, or gossipy. It is believed that this gossip girl knows all of the rumors, urban legends, and developing stories in the community.
And, indeed it is. At the onset of the trade Wednesday, the peso was selling just within the trading band of P58.58 and P58.62 with the FX settlement rate pegged at P58.63 to a dollar, up by six centavos from the previous day’s P58.69.
But, the developing story, though there was yet no official announcement was the VP’s resignation. While there was no admission yet, this bit of news silently sipped through the currency market. A number of currency players got wind of the resignation and increased their purchases, pushing the volume before the mid-morning trade break to close to $600 million.
As the Marites culture rumbled across the market, the afternoon trade opened the value of the peso dipping 12 centavos then by 15 centavos, bringing the peso to an intraday low of P58.77.
From what I’ve gathered in the banking community, the peso would have skidded further in value if not for the presence of the authorities, selling greens at P58.80.
On-goings in the political scene influence significantly trading in the currency market amidst stable macroeconomic variables. Yes, Virginia political instability, both here and abroad, is almost always a game changer.
This brings to mind the resignation of then Vice President Gloria “GMA” Macapagal-Arroyo in 2000, also, as social welfare secretary at the height of the corruption charges against President Joseph “Erap” Estrada.
The currency, at that time, was trading within the P45 levels but jumped to P50 in 2001 as the call for President Erap snowballed, paving for the Second EDSA revolution.
In the recent past, the peso depreciated to its all-time low of P59 to a dollar sometime in March 2022, largely due to the expected economic impact following the invasion by Russia of Ukraine.
The buzz going around the banking community is the possibility of the peso inching towards the high of P58, flirting with the P59 level as all eyes and ears are glued to the Palace on who will be the VP’s replacement as social welfare secretary and National Task Force to End Local Communist Armed Conflict vice chairperson.
Just on the side and a bit of history here: Senator Teofisto “Tito” Guingona holds the distinction as the only vice president of the country, who wasn’t voted to the position.
The position of vice president became vacant following the resignation of Pres. Erap, GMA became the country’s 14th chief executive. Sen. Tito, who was the senate president, was automatically promoted by GMA. He was the 11th VP of the country.
Back to the market, the impact of the resignation is believed to be temporary. It will have fleeting pressure on an already underpressured local currency simply because of stronger green.
In addition, the import season is approaching. And depending on what action the BSP will take on the key interest rate, all things considered, the peso will continue to be under pressure. As I write this, the currency trading opened at a quote of P58.79, eight centavo lower from the closing quote of P58.71 Wednesday.
This market observer will continue to watch developments in the market and will share the back story.
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