Philippine peso extends record slide as oil volatility, Middle East tensions outweigh BSP rate hike

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Philippine peso extends slide

Highlights

Philippine peso closes at a record low of P63.52 per U.S. dollar on Thursday, down 7.45% year to date and falling for the fourth straight day.
BSP raises its policy rate by 50 basis points to 5.5%—the highest in almost two years—but Governor Remolona confirms rate hikes are not intended to defend the peso.
Persistent external pressures, including strong U.S. dollar, elevated oil prices, and Middle East tensions, outweigh monetary tightening and continue to erode investor sentiment toward the peso.

Record low deepens despite policy tightening

As reported by BusinessWorld Online, the peso falls by 15.9 centavos to close at P63.52 per U.S. dollar on Thursday, from its previous record low of P63.361 a day earlier, based on Bankers Association of the Philippines data.

The latest finish marks the peso’s 35th record low this year, its sixth in October and its fourth straight trading day at a historic low. Year to date, the currency has weakened by P4.73, or 7.45%, from its P58.79 close on Dec. 29, 2025.

The local unit opens the session slightly firmer at P63.31 per dollar and trades as strong as P63.30 intraday, before sliding to a session low of P63.545, also its weakest level on record. Dollar turnover rises to $1.716 billion from $1.34 billion in the previous session.

The BSP hikes its target reverse repurchase rate by 50 basis points to 5.5%, an almost two-year high, extending its tightening cycle for a fourth straight meeting. BSP Governor Eli Remolona, Jr. says after the policy meeting that the central bank is not raising rates to defend the peso, although it does intervene in the foreign exchange market to limit swings that could fuel inflation.

External risks keep pressure on outlook

Analysts say the peso remains under pressure from broad U.S. dollar strength, elevated oil prices and rising tensions in the Middle East, factors that add to the Philippines’ import bill and weigh on sentiment toward external accounts.

Ser Percival K. Peña-Reyes, senior research fellow at the Ateneo Center for Economic Research and Development, says the peso’s weakness reflects uncertainty over U.S. interest rates, expensive oil and domestic vulnerabilities such as external deficits and steady demand for dollars. He says external pressures are the main trigger, amplified by the economy’s reliance on imports.

John Paolo R. Rivera, senior research fellow at the Philippine Institute for Development Studies, says global uncertainty and the country’s widening balance of payments deficit continue to weigh on investor sentiment and the external position. He says monetary tightening can help moderate depreciation but cannot fully offset global dollar strength and structural imbalances.

China Banking Corp. Chief Economist Domini S. Velasquez says a sustained peso recovery depends on improving confidence in the domestic economy through stronger fundamentals, faster growth and better business confidence. Peña-Reyes adds that the currency could test P64 per dollar within days or weeks if oil stays expensive and the U.S. dollar strengthens, while one trader says remittances may still offer some support in the final two months before the holidays, though likely less than in previous years. For Friday, the second trader sees the peso moving within a P63.40 to P63.80 range.

In our earlier article on Philippine stocks rebounding despite peso weakness, we noted that the PSEi rose on bargain hunting even as the peso slid to a then new all-time low near the P63-per-dollar level. We also highlighted that foreign buying returned after several sessions of outflows, while investors stayed cautious and kept a close watch on currency moves and wider macro risks.

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