Peso slides to new record low
MANILA, Philippines — The Philippine peso fell to a record low on Wednesday, pressured by a strengthening US dollar as markets appeared unfazed by recent geopolitical upheavals and investors awaited economic data expected to clarify the future course of American monetary policy.
The peso weakened by 14.5 centavos to close at 59.355 to the dollar, surpassing its previous record low of 59.22, set on Dec. 9, 2025. It touched an intraday low of 59.38 against the greenback.
Trading volume totaled $1.32 billion, down nearly 5 percent from the previous session.
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A trader said yesterday’s action was “largely a story of firm US dollar strength and shifting rate expectations at home.”
Markets were mostly in wait-and-see mode ahead of US labor data and nonfarm payrolls report this week — which could set the tone for the Federal Reserve’s interest rate outlook this year.
“With markets pricing in further Bangko Sentral ng Pilipinas (BSP) easing while US yields stay elevated, carry demand for the peso has weakened,” the trader said.
“Near term, the currency is likely to remain soft and trade around this area, with stability hinging on clearer policy signals and sustained inflows from remittances and tourism.”
A weaker peso carries mixed consequences for the Philippines. It boosts the domestic value of remittances sent home by millions of overseas workers and could help make Filipino exports more competitive. But it also risks driving up import costs and reigniting inflation. It likewise inflates the peso value of foreign debt.
Let market forces determine the exchange rate
The local central bank has signaled it will allow market forces to determine the exchange rate, intervening only if a sustained downturn threatens to fuel imported inflation.
The monetary authority is willing to absorb some currency weakness as it approaches the conclusion of its pro-growth push. BSP Governor Eli Remolona Jr. this week signaled that the central bank’s easing cycle could end with just one more interest rate cut — possibly in February — unless “bad surprises” emerge that would justify further reductions.
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To help offset the economic drag from a widening corruption crackdown, the BSP cut its benchmark interest rate by a quarter point to 4.5 percent at the Monetary Board’s Dec. 11 meeting. The move, widely expected by economists, brought total reductions since the easing campaign began in August 2024 to 2 percentage points.
Sanjay Mathur, ANZ Research chief economist for Southeast Asia and India, projected one more 0.25 percentage-point rate cut in the first quarter of 2026, followed by an extended hold lasting into 2027.
“In the Philippines, both consumer and business sentiment have been depressed, particularly after the revelation of governance issues in public infrastructure spending,” he said.
