Rising government debt weighs on Thai baht and Philippine peso

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The Thai baht and the Philippine peso continue their downtrend as the two countries increase their public debts to help boost their economies hit by Covid.

The baht is currently trading at 33.40 per dollar, falling from 33.36 on Monday to 0.3% lower than 33.0 on Friday. Over the past five sessions, the currency has lost 1.6% of its value.

“The THB extended its depreciation for a third session above 33 per dollar, approaching the lowest level of the year around 33.5. Thailand has raised its public debt ceiling from 60% to 70% of GDP (gross domestic product) to help its Covid-stricken economy, ”said Philip Wee, senior currency strategist at DBS, in a note.

Peso looks at the bottom of the year

The Philippine peso has also depreciated sharply since Wednesday, falling as much as 1% in the past five sessions. Local unit broke through the psychological level of 50.0 last week and came down to 50.23 on Monday.

The peso is currently trading at 50.11 per dollar, but will likely head towards the 50.5 level – which will be the weakest level this year, according to Wee.

“The Philippines is also approaching its 60% threshold,” he said.

Risk aversion amid Evergrande’s default worry

Southeast Asian currencies are also affected by general risk aversion due to concerns over China’s Evergrande default, with the yuan heading towards the 6.5 mark, while overall volume Trade in the region is lower due to public holidays in China, Japan and South Korea. .

The dollar index broke through the 93 level on Friday and hit 93.45 on Monday, before falling back to 93.17 around noon in Asia on Tuesday.

“The decline in risk sentiment saw the DXY index rise near 93.50. The ensuing pullback reinforced our view that the broad USD is supported, but not seeking to break out without more. signals from the FOMC (Federal Open Market Committee), ”the OCBC said in a note, adding that the weaker yuan pushed the dollar to gain against other Asian currencies.

Read more: Thailand to raise debt ceiling to 70% – report

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