Peso hits record-low 59 as Trump 2.0 boosts dollar

The Philippine peso on Thursday sank to a record-low 59 against the greenback as Donald Trump’s return as US president continued to embolden the dollar bulls.

Surrendering a key resistance, the local currency shed 9 centavos from its previous day’s finish to revisit the level last touched on Oct. 17, 2022—back when a super-hawkish US Federal Reserve had propped up the dollar and set off a rampage across other currencies.

Figures showed a total of $842.68 million worth of funds switching hands at the spot foreign exchange market.

READ: Cratering peso sinks to record-low 59 to a dollar

In a commentary, Jonathan Ravelas, senior adviser at professional services firm Reyes Tacandong & Co., said the cratering peso reflected the recent rise of the 10-year US Treasury yield amid threats of a global trade war following Trump’s election win.

At home, “expectations of rate cuts” by the Bangko Sentral ng Pilipinas (BSP) despite the market volatility are also adding pressure to the peso, Ravelas said.

“This could persist in 2025. Near-term risk is 60,” he added.

A trader said the “mixed” policy signals from the BSP were not helping the peso. Meanwhile, another trader said escalating tensions between Russia and Ukraine “exert increased safe-haven demand for the greenback.”

Rate cut pause?

Some analysts had flagged the risks of a rate-cutting pause by the BSP should the peso remain under pressure.

Unlike in the United States, where a slowing job market prompted the Federal Reserve to deliver a jumbo 50-basis-point (bp) cut in September, the BSP entered its easing era in August with the traditional quarter-point reduction of the policy interest rate.

In October, the BSP cut the policy rate by 25 bps again to 6 percent, with Governor Eli Remolona Jr. dropping clear hints of additional—but gradual—easing moves until the key rate falls to 4.5 percent by the end of 2025.

BSP hand

But this week, Remolona floated the possibility of an easing pause at the Dec. 19 meeting of the Monetary Board, citing persistent price pressures. To prevent the peso from weakening too much and fanning inflation, the BSP chief said the central bank had been intervening in the foreign exchange market recently, albeit in “small amounts.”

Remolona nevertheless said that while an easing delay is possible next month, the BSP would remain in its rate-cutting cycle to support an economy that had posted weaker-than-expected growth in the third quarter.