The Philippine peso sank to a historic low on Wednesday, closing at 61.567 against the US dollar, as a strengthening greenback and heightened safe-haven demand amid the Middle East conflict weighed on emerging-market currencies.
The previous record low of 61.3 was set just a day earlier. During intraday trading, the peso touched a trough of 61.67 before paring some losses. Trading volume dipped to $1.6 billion from $1.7 billion as activity in Asia thinned due to a holiday in Japan and several major central bank decisions expected this week.
Traders attributed the peso's decline to a broadly stronger dollar, fueled by expectations that the US Federal Reserve will keep interest rates elevated for longer. Markets now price the first rate cut in December 2027, keeping US rates high and sustaining demand for the greenback.
The weaker peso has mixed consequences. Remittances from overseas Filipino workers gain more purchasing power, and exporters become more competitive. However, it risks stoking imported inflation and increasing the cost of servicing foreign-currency debt.
The latest depreciation occurred despite the Bangko Sentral ng Pilipinas (BSP) raising its key rate by 25 basis points to 4.5% last week—the first hike in over two years. BSP Governor Eli Remolona Jr. said the central bank would only intervene in the spot market if the peso's fall becomes sharp and disorderly.
Looking ahead, analysts see continued pressure. Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., noted that uncertainty keeping oil prices elevated and safe-haven trades alive. "Risk lies at 62 to 62.50 in the near-term," he said.