The Philippine peso tumbled to a more than seven-year low against the dollar this week, as investors voted with their feet on the country's intemperate president.
The archipelago's currency has swooned since September 6, when Barack Obama cancelled a meeting with Philippine President Rodrigo Duterte after Duterte used a derogatory term to describe the U.S. president. On Monday the greenback fetched as many as 48.457 Philippine pesos, the highest for the pair since the depths of the global financial crisis in 2009.
In a Tuesday note, Mizuho cautioned that "while investors were initially willing to discount the new president's sometimes shocking rhetoric as merely for guffaws to a domestic audience, things took a sharp turn when his acerbic retort to Obama led to real consequences."
The Philippine peso recovered somewhat from its lows in Tuesday's trade, with the dollar fetching around 48.235 pesos, but analysts attributed that move to a general risk-on in markets after the Democratic candidate for U.S. president, Hillary Clinton, was widely seen as having bested her GOP opponent Donald Trump in the first debate.
But analysts expected the peso's reprieve would be short-lived.
"In the near term, we could well see further pressure on the Philippine peso as sentiment is quite sour as a result of concerns over President Duterte's comments and behavior," Khoon Goh, senior foreign-exchange strategist at ANZ, said on Tuesday. "We've seen foreigners selling out of the Philippine equity market on a consistent basis in the past month or so."
The firebrand Duterte, who is often compared with Trump, has sparked concerns in markets not just for his erratic outbursts, which have included threatening China with a "bloody" confrontation over disputes in the South China Sea, but also for pursuing a "law-and-order" agenda that has been been blamed for a surge in extra-judicial killings. The parliament has also been told of murders allegedly ordered by the Philippine president during his tenure as mayor of Davao city.
Duterte has denied the allegations, but has also made comments indicating he condoned both those murders and ones since he took the country's top office.
More than 3,800 people have been killed in Duterte's crackdown on drugs since the June 30 inauguration, Reuters reported last week.