Philippine Peso Tests Record Low

The Philippine peso weakened to 59.3 per dollar, testing a new record low, after the Bangko Sentral ng Pilipinas signaled a near-term rate cut. BSP Governor Eli Remolona said a February rate cut is “on the table” but not certain, noting that despite the December inflation pickup, it remains “reasonably low.” He added that the country’s economic growth this year will likely fall short of the government’s target, though he earlier indicated the policy rate is now close to its desired level and that any cut may be the final one for the year. Still, bearish momentum has strengthened as the central bank expressed a relaxed stance on the currency’s depreciation. Remolona said policymakers are focused on whether currency moves could sharply impact inflation rather than on absolute levels. The peso is also pressured by a deteriorating current-account balance, and declining investor confidence amid a government corruption scandal.

The Philippine peso traded around the key 59-per-dollar level, just shy of its historic low, showing little reaction despite signals from the Bangko Sentral ng Pilipinas that its easing cycle is nearing an end. The BSP said it may deliver one final rate cut this year, possibly in February, with Governor Eli Remolona noting the policy rate is now close to its desired level. His comments came after data showed annual inflation rose to 1.8% in December from 1.5% in November, above expectations and the highest since March. The central bank said inflation may edge higher this year but remain within the 2%–4% target band, while domestic demand is expected to recover gradually as lower rates and stronger public spending take effect. Still, the peso remains under pressure from weak investor confidence and muted foreign inflows.

The Philippine peso rose to around 59 per dollar, rebounding slightly from record lows, after the Bangko Sentral ng Pilipinas delivered an expected rate cut but signaled it could be the final move in the current easing cycle. BSP Governor Eli Remolona said domestic demand is set for a gradual recovery, adding that any further easing would likely be limited and guided by incoming data. The BSP has cut borrowing costs by 125 bps this year, providing support to consumption and investment. However, a graft scandal involving billions earmarked for flood control projects has restrained state spending, which accounts for about 20% of GDP. The central bank also highlighted a weakened domestic growth outlook, noting that business sentiment remains subdued amid governance concerns and ongoing global trade uncertainties. Still, domestic demand is expected to recover gradually as the effects of monetary easing take hold and public spending improves in both pace and quality.