Peso sinks to 31st record low in 2026 at P63.615:$1

The Philippine peso plummeted to a new record low on Friday, marking its 31st of the year, after hitting an all-time low each trading day this week.

The local currency shed 9.5 centavos to close Friday at P63.615:$1, surpassing Thursday’s finish of P63.52:$1, the previous record. It weakened to as low as P63.62:$1 during the trading session.

Friday’s depreciation came as global crude oil prices surged to new five-month highs — Brent crude to $114 per barrel — on a possible attack by the United States on Iran.

“The sharp increase in global crude oil prices since the war on Iran/Middle East started could lead to a higher oil import bill for the country, as well as widen the country’s trade deficit/net imports, current account deficit, and balance of payments deficit,” Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said in a mobile message.

Higher imports would increase demand for the US dollar, the typical currency for purchases. This, in turn, could put further pressure on the peso and drive up domestic prices, as a weaker currency makes imported goods more expensive.

Inflation clocked in at 7.2% in September, matching April’s print, and the fastest since March 2023’s 7.6%. This brought the year-to-date average to 5.4%, above the government’s target range of 2.0% to 4.0%.

Ricafort was echoed by Philippine Institute for Development Studies (PIDS) senior research fellow John Paolo Rivera, who cited the continuous demand for the greenback amid overseas concerns.

“Reflects persistent dollar demand, elevated oil prices, global uncertainty, and pressures from the widening BOP deficit (that) continue to weigh on investor sentiment and the country’s external position,” he said in a separate mobile message.

The country’s balance of payments (BOP) position stood at a $9.1-billion deficit as of end-September, wider than the $5.3-billion deficit in the same period last year.

The payments position takes into account Philippine transactions with the rest of the world during a specific period. A surplus means more funds entered the country, while a deficit means more funds exited.

Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. maintained that the central bank lets the market determine the exchange rate, and intervenes only when large swings occur.

“We are concerned because it (the peso depreciation) might be inflationary,” he said earlier, but noted that current conditions have not yet met the central bank’s threshold that would drive up inflation.

“We don’t defend the level or price, so we let the market determine that. Hopefully the market gets it right in the long term,” he said.

The central bank hiked key policy rates by 50 basis points on Thursday, as it hiked its 2027 inflation forecast to 6.0% from 5.4% previously. It kept its inflation forecast unchanged for 2026 at 6.1%, and for 2027 at 3.3%.

“BSP rate hike could help stabilize the peso by supporting peso-denominated assets and narrowing interest rate differentials. Impact may be limited if external pressures persist,” PIDS’ RIvera said.

“Monetary tightening can moderate depreciation, but it cannot fully offset global dollar strength and structural external imbalances,” he added.

The sentiment was mirrored by Reyes Tacandong & Co. senior adviser Jonathan Ravelas, who also cited the Middle East conflict.

“Despite the rate hikes, the stronger dollar remains the bigger story. As long as US inflation stays sticky and renewed concerns in the Middle East conflict persist, the peso is likely to remain under pressure, with USD/PHP trading near 63.50 to 63.75,” he said separately.

The local equities market also ended the week on a negative note, as the main Philippine Stock Exchange index (PSEi) dropped 51.1 points or 0.88% to 5,728.63, while the broader All Shares index fell by 27.67 points or 0.86% to 3,193.29.

Nearly all sectoral indices closed in the red — industrial down 1.51%, holding firms down 1.52%, property down 1.88%, services down 0.01%, and mining and oil down 2.12%. The financials index was the sole gainer, up 0.03%.—LDF, GMA News