Philippine Peso Slides Back to Record Low

The Philippine peso depreciated to around PHP 58.8 per dollar, following tame inflation that could create room for further rate cuts.

Annual inflation stood at 1.7% in October, below the expected 1.8% and remaining under the central bank’s 2%–4% target range.

Core inflation also eased to 2.5% from 2.6%, strengthening the case for additional BSP rate cuts after the unexpected reduction in early October and the central bank’s signal that borrowing costs could be lowered by another 25 bps in December.

Adding to pressure, the US dollar strengthened amid fading expectations of further US monetary easing.

Meanwhile, Governor Eli Remolona recently downplayed speculation that the central bank targets specific exchange rates, calming markets after the BSP reiterated that the peso is mainly guided by market forces, which had pushed the currency to record lows in October.

Looking ahead, year-end remittances are expected to support the currency, potentially lifting it by December.

The Philippine peso rose to around PHP 58.7 per dollar on October 29, rebounding from a record low the previous day as market sentiment improved following remarks from Bangko Sentral ng Pilipinas Governor Eli Remolona.

He downplayed speculation that the BSP was targeting specific exchange rate levels, though he did not comment on whether the central bank intervened in the market.

His remarks came after the BSP reiterated that the currency is mainly guided by market forces, with interventions focused on smoothing inflation-driven swings rather than curbing daily volatility.

Meanwhile, the peso’s rebound comes ahead of the expected seasonal boost from year-end remittances, which could strengthen the currency by more than 2% to around PHP 57.80 per dollar by the end of December.

Historically, remittance inflows peak in December, helping the peso strengthen in eight of the past ten years.

The Philippine peso weakened to a record low of PHP 59 per dollar in late October, continuing its bearish trend after signals from the central bank that it would tolerate further depreciation.

The Bangko Sentral ng Pilipinas said the peso is guided by market forces, intervening mainly to smooth inflation-driven swings rather than curb daily volatility.

The remarks suggest the central bank is more willing to let the peso weaken, unlike other Asian economies that have intervened to prop up their currencies.

Pressure was further compounded after the BSP’s unexpected interest rate cut in early October and its signal that borrowing costs could be reduced by another 25 bps in December, with additional cuts possible in 2026.

Allegations of widespread misuse of billions of dollars intended for flood-control projects have also clouded the Philippines’ growth outlook, further undermining investor confidence.

The Philippine peso weakened to around ?58.3 per dollar in October, giving back recent gains after a surprise 25-basis-point rate cut by the Bangko Sentral ng Pilipinas.

Policymakers said the decision was made as inflation remains within target and expectations are stable, though possible electricity rate and rice tariff hikes could add pressure.

The Monetary Board also highlighted weaker domestic growth amid subdued business sentiment and concerns over governance and infrastructure implementation.

Adding further downward pressure on the currency were concerns over corruption and social unrest. The president recently appointed a former Supreme Court justice to lead a probe into alleged graft in infrastructure projects, particularly flood control systems that failed during recent typhoons, while late-September protests and clashes with police added to market uncertainty.

The Philippine peso depreciated past $58 per dollar in early October, approaching its lowest level since August 1, as concerns over corruption claims and ongoing social unrest kept investors at bay.

The Philippine president recently appointed a former Supreme Court justice to lead a new commission investigating alleged corruption in infrastructure projects, with a focus on flood control systems that underperformed during recent typhoons.

Meanwhile, a series of mass demonstrations occurred in late September, during which police and protesters engaged in scattered clashes, adding to market uncertainty.

Investors are now watching the central bank’s policy decision later this week.

While some analysts expect rates to remain unchanged, others see the possibility of a cut.

Economists note that the outlook for monetary policy is uncertain, with the decision likely to hinge on balancing growth concerns with inflation.