Philippine peso nears P64 as dollar strength, oil volatility pressure currency

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Philippine peso nears P64

Highlights

Philippine peso closes at P63.95 per dollar on Monday, marking its 37th record low this year despite BSP’s 50 bps hike to 5.5%.
Balance of payments deficit widens to $3.144 billion in September, the largest in nearly two years and a third straight monthly shortfall.
Analysts warn further depreciation is likely as oil volatility and external pressures persist, with the exchange rate seen possibly breaching P64 soon.

Record low extends despite BSP tightening

As reported by BusinessWorld Online, the peso closes at P63.95 per dollar on Monday, down 33.5 centavos from P63.615 on Oct. 23 and marking its 37th record low this year, based on Bankers Association of the Philippines data.

The local currency opens slightly firmer at P63.535 and reaches an intraday best of P63.5, but later slides to its weakest level of the day at the close. That level also surpasses the previous intraday record low of P63.62. Dollar volume rises to $1.649 billion from $1.285 billion in the previous session.

Analysts say stronger crude prices and renewed geopolitical tensions support the U.S. dollar and deepen pressure on the peso. China Banking Corp. Chief Economist Domini S. Velasquez says higher oil prices over the weekend and remarks by U.S. President Donald J. Trump on possible renewed military action against Iran strengthen the dollar, while local weakness also reflects fading investor confidence amid concerns that the Philippines could face stagflation.

Pressure on the currency persists even after the Bangko Sentral ng Pilipinas raises its benchmark rate by 50 basis points to 5.5% at its Oct. 22 meeting. The central bank says the move is needed to contain broadening price pressures and anchor inflation expectations, while Governor Eli M. Remolona, Jr. says further hikes remain possible as inflation is seen staying elevated until next year.

Balance of payments strain and market outlook

The peso’s decline also tracks continued stress in the country’s external accounts. The Philippines posts a $3.144 billion balance of payments deficit in September, wider than the $596 million shortfall in August and reversing the $82 million surplus recorded a year earlier.

That result marks a third straight monthly deficit and the largest monthly gap in nearly two years, since January 2025. Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera says tighter monetary policy can help steady expectations and temper depreciation, but cannot fully offset pressure from the balance of payments and the inflation risks tied to sustained peso weakness.

Market watchers warn the exchange rate could break past P64 in the near term if current pressures continue. Velasquez says the peso’s repeated testing of record lows despite rate increases in August and October suggests higher interest rates alone may not be enough to support the currency, while Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas says the peso could weaken to P65 unless issues tied to food security, transport and electricity are addressed.

For the rest of the week, traders are watching the U.S. Federal Reserve’s policy meeting, U.S. jobs data and local trade figures for direction. A trader says the Fed may help cap further depreciation if it keeps rates on hold, while Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort says fourth-quarter remittance inflows could offer some support; forecasts for Tuesday place the peso in a P63.70 to P64.20 range.

In our earlier article on the PSEi rebound despite the peso hitting a fresh record low, we described how bargain hunting helped lift Philippine shares even as the currency slid to P63.06 per dollar. We also noted that while foreign buying returned, sentiment stayed cautious as investors kept a close watch on ongoing peso weakness and broader macro risks.

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