Don’t expect to feel effects of peso appreciation right away —economist

Do not expect the effects of the peso’s appreciation against the US dollar to be felt immediately, especially as the prices of fuel and other goods that have already increased, an economist said.

The Philippine peso strengthened following the announcement of a two-week ceasefire between the United States and Iran, gaining 90 centavos to close at P59.43:$1 from Tuesday’s finish of P60.33:$1 to mark its best showing since March 12, 2026 when it closed at P59.385:$1.

But according to Professor Emmanuel Leyco, price adjustments, particularly for petroleum, are not instantly reflected in the market because companies base pricing on replacement costs or current global prices, not on past purchases.

“Ang problema natin, pagka pataas, magbilis. Pagka pababa, maraming mga dahilan, maraming argumento, katulad ng petrolyo, sinasabi nila, ang batayan yan is yung replacement cost, yung current price sa world market. Kahit na binili nila ng mas mababa noong isang buwan, walang $100 per barrel yun. Dahil ang bilihan ng oil, kada bariles. Pero ngayon, nasa more than 100 na. Kanina, bumaba sa 100, hindi agad natin makikita ito sa merkado. Sasabihin nila, eh, teka muna, kasi nabili namin yan mataas,” said Leyco, chief economist of Credit Rating and Investors Services Philippines, Inc. and fellow at the Center for People Empowerment in Governance.

(Our problem is, when the prices go up, it's quick. When prices should go down, there are so many reasonings, arguments made, such as with petroleum, they say that their basis is the replacement cost, the current price on the world market, even if they bought it at a lower price the past month below $100 a barrel. Because the purchase of oil is per barrel. And now, the price is more than $100. A while ago today, it went below $100, but we won't immediately see the effect on the market. They'll say, 'Wait a minute, when we bought the oil its price was still high.') 

While the impact is not immediate, a stronger peso is generally seen as positive for the broader economy.

As a net importer, the Philippines benefits from a stronger currency because it makes imports such as fuel, food, and raw materials cheaper, helping ease inflation over time and increasing the purchasing power of Filipinos.

“Kasi net importer tayo at ang ginagamit natin pang import ay dolyar, mamimili tayo ng dolyar gamit natin ang piso so kung mataas ang presyo o mataas ang palitan ng piso kontra dolyar eh mataas din ang presyo ng mga ini-import natin dito. Pero pagka bumaba naman ang palitan ng piso kontra dolyar, makakabuti yan doon sa ating importation,” Leyco said.

(Because we are a net importer and what we are using during importation is the dollar, we buy dollars using the peso so if the exchange against the dollar is high then the price of our imports will also be high. And when the peso-dollar exchange goes down, it benefits our importation.)

However, the peso’s appreciation may not favor everyone. Those holding US dollars, including overseas Filipino workers sending remittances, may receive less in peso terms.

"Hindi ito makakabuti doon sa may mga hawak na dolyar dahil mas mababa ang palit," Leyco added. 

"So makikita agad nila na pagka nagpunta sila sa bangko, mas mababa ang makukuha nilang kapalit ng dolyar na pinapalit nila sa mga bangko."

This will not be beneficial to those with dollars because the exchange will be lower. They will see that when they go to the bank, they will get a lower peso amount for their dollars.) — BM, GMA News