Peso hits record low, weakens to 59.13:$1

MANILA, Philippines — The peso depreciated for the 10th straight trading day to close at 59.13 against the dollar yesterday, marking a new record low amid market concerns over slower economic growth and expectations of further monetary easing.

Data from the Bankers Association of the Philippines showed that the local currency slid by 23 centavos from its 58.9 finish on Wednesday. This is lower than the close recorded on Dec. 19, 2024, when the peso reached 59 versus the greenback.

The peso opened at 58.90 yesterday, which was also its intraday best. The exchange rate touched an intraday low of 59.20 before settling at 59.13 at the end of the day.

Trading volume went up by nine percent to $1.75 billion yesterday from $1.6 billion on Monday.

The local currency has depreciated by P1.285 or 2.2 percent from its 57.845 to $1 close on Dec. 27, 2024.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said the recent weakness of the peso may be due to market concerns over slower economic growth and expectations of further monetary easing.

“The BSP allows the exchange rate to be determined by market forces,” the central bank said in a statement yesterday, after the peso breached the 59-per-dollar level on Monday, its weakest level in 10 months.

“The recent peso depreciation may reflect market concerns over a potential moderation in economic growth due in part to the infra spending controversy, as well as expectations of additional monetary policy easing by the BSP,” the central bank said.

The BSP also said it continues to maintain a healthy level of foreign exchange reserves, giving it room to manage excessive volatility when needed.

“When we do participate in the market, it is largely to dampen inflationary swings in the exchange rate over time rather than to prevent day-to-day volatility,” it said.

Based on central bank data, the country’s foreign exchange buffer climbed for a second straight month to $108.8 billion as of end-September, rising from $107.1 billion in August. It marked the highest level since October 2024, when reserves stood at $111.1 billion.

Still, the peso remains supported by the country’s strong macroeconomic position.

“The peso continues to be supported by resilient remittance inflows, still relatively fast economic growth, low inflation and ongoing structural reforms,” the BSP said.

It added that foreign exchange inflows from the business process outsourcing industry, tourism receipts and remittances from overseas Filipino workers continue to help cushion the economy from external shocks.

RCBC chief economist Michael Ricafort said the peso’s slide reflected both external and domestic factors, with the dollar-peso rate breaching above P59 for the first time in 10 months.

The exchange rate touched an intraday high of P59.20 on Oct. 28, surpassing the previous record level last seen in December 2024, before settling at P59.13, he said.

Ricafort said local market sentiment has been partly weighed by “political noises in recent weeks” that could distract from economic reforms.

He noted that improving governance standards, particularly in fiscal and infrastructure spending, as well as measures to curb leakages and wastage, could help boost investor confidence and support the peso.

According to Ricafort, the peso’s year-to-date depreciation of about 2.3 percent is broadly in line with movements of other regional currencies, such as the Indonesian rupiah and the Indian rupee.

He said the BSP’s intervention would remain a key factor influencing the peso’s trajectory, adding that ignoring the central bank’s role “would be a mistake for those looking for higher levels.”

Ricafort also cited positive factors that could help temper further weakness, including the seasonal increase in overseas remittance inflows ahead of the Undas and Christmas holidays, as well as expected foreign inflows from the initial public offering of Maynilad Water Services Inc.