In Philippines, the recent depreciation of the peso against a backdrop of regional currency weakness brings back memories of the 1997 Asian crisis or the 2008 GFC. The peso fell 50% in 1997 and 15% in 2008.

Year to date in 2015, the peso is down only 5% and is expected to be relatively resilient compared to other Asian currencies. The peso's resilience is rooted in significant differences between today's conditions and those that prevailed in 1997 and 2008, in terms of the external balances, external and domestic debt levels and modest direct exposure to the key pressure point - which is currently China, states Bank of America.



The Philippines' current account turned positive beginning 2003 mainly due to growth in remittances and tourist receipts, paired with declining interest payments on foreign debt, and has been enough to overwhelm a chronic trade deficit. The sharp drop in the current account surplus seen in 2008 is unlikely to be repeated in 2015, with the key difference in 2015 being sharply lower oil prices and a further decline in debt servicing costs, says Bank of America.



Meanwhile, the Philippines' leverage ratios look far better in 2015 than they did in 1997, both in terms of total external debt and domestic dollar debt. The absolute level of external debt peaked at US$79.9bn in 2012 and has since gradually eased. Relative to GDP, the level of external debt has dropped more dramatically. Debt service costs have fallen even faster as a result of the improved credit rating achieved by the sovereign in recent years - a factor that is supportive of the current account.