Philippine peso hits fresh low P62.40 vs US dollar - BusinessWorld Online
TITLE: Philippine peso hits fresh low P62.40 vs US dollar - BusinessWorld Online
The Philippine peso reached an unprecedented low against the US dollar on Tuesday, as a combination of aggressive signals from the United States Federal Reserve and escalating geopolitical instability in the Middle East bolstered the American currency. According to data provided by the Bankers Association of the Philippines, the local currency dropped 13.5 centavos to finish at P62.40 per dollar. This closing figure surpassed the previous record of P62.265 established just last Friday.
Since the start of the year, the peso has lost P3.61 in value, representing a 5.79% depreciation from its finish of P58.79 on December 29, 2025. During Tuesday's trading session, the peso opened at P62.25, which served as its strongest point for the day. However, it eventually slid to its closing rate of P62.40, a level that also went beyond the intraday low of P62.27 recorded on Friday.
Global Factors and FED Signals
Ruben Carlo O. Asuncion, the Chief Economist at Union Bank of the Philippines, Inc., attributed the decline to a robust US dollar environment. He noted that this strength is being fueled by climbing US Treasury yields and an increasing anticipation that the Federal Reserve will implement a rate hike. Furthermore, Asuncion pointed to rising oil prices resulting from heightened tensions in the Middle East as a significant factor. These global shifts have prompted investors to move capital toward dollar-denominated assets, which in turn raises concerns regarding inflation and the cost of imports for nations like the Philippines that rely on foreign energy.
Michael L. Ricafort, who serves as the Chief Economist at Rizal Commercial Banking Corp., also observed that the greenback maintained a generally strong position. He linked this trend to hawkish commentary delivered by Federal Reserve Chair Kevin Warsh during the Jackson Hole Symposium held last week. While the peso faced significant downward pressure, Ricafort suggested that the decline was somewhat mitigated by indications that the Bangko Sentral ng Pilipinas, or BSP, may have stepped into the market to manage extreme volatility.
Central Bank and Volatility Management
Despite potential market smoothing, an anonymous trader indicated that the central bank has signaled it will not attempt to protect the peso if its trajectory simply follows broader regional trends or the general strength of the US dollar. This stance aligns with recent statements from BSP Governor Eli M. Remolona, Jr., who clarified on Thursday that the central bank’s role is limited to slowing the pace of depreciation and controlling volatile swings. Remolona emphasized that the BSP cannot commit to defending a specific exchange rate level because doing so would eventually deplete the nation's foreign reserves.
Jonathan L. Ravelas, a Senior Adviser at Reyes Tacandong & Co., stated that the Philippine currency is expected to remain under significant strain in the immediate future. Asuncion echoed this sentiment, noting that international factors will likely continue to dictate the peso's path over the coming months. Market participants are particularly focused on forthcoming economic data from the United States and the Federal Reserve’s upcoming policy meeting scheduled for later this month.
Near Term Trading Range
While high energy costs and elevated global yields may keep the peso on the defensive, Asuncion highlighted several domestic factors that could provide a cushion against excessive volatility. These include steady inflows from overseas worker remittances, revenues from the business process outsourcing sector, tourism earnings, and foreign investment. Looking ahead, both Ricafort and Ravelas project that the peso will likely fluctuate within a trading range of P62.25 to P62.50 against the US dollar in the near term.
Source: bworldonline.com · 2026-09-01