Philippine Peso Slides to Record Low

The Philippine peso appreciated to around 62.9 per US dollar on Thursday, supported by stronger-than-expected inflation data that reinforced expectations of further monetary tightening. Annual headline inflation accelerated to 7.8% in October from 7.2% in September, exceeding forecasts of 7.6% and marking its highest level since February 2023. Core inflation also rose to 5.4% from 4.8%. The acceleration strengthens the case for further Bangko Sentral ng Pilipinas (BSP) rate hikes as policymakers seek to contain price pressures and anchor inflation expectations. The central bank has already raised rates four times this year. Meanwhile, a weaker greenback following Democrats' victories in both chambers of the US Congress provided additional support. Nevertheless, elevated global oil prices continue to pose risks by adding to domestic inflation and increasing the country's import bill and demand for foreign currency, leaving the peso vulnerable despite its latest gains.

The Philippine peso edged down to 63.4 per US dollar, marking its weakest level on record, despite a jumbo rate hike by the Bangko Sentral ng Pilipinas. The central bank raised its benchmark interest rate by 50 basis points to 5.5% at its October 2026 meeting, marking its fourth consecutive increase and larger than expected amid heightened inflation risks. The rate hike, however, failed to lift the peso, as elevated oil prices continued to weigh on the currency, with Brent crude rising above $110 per barrel amid renewed tensions around the Strait of Hormuz. The country is particularly vulnerable to the conflict given its heavy reliance on imported fuel and food supplies. The nation’s deteriorating external position further pressured the peso and raised concerns over imported inflation.

The Philippine peso depreciated to around 63 per dollar in mid-October, hitting a record low as concerns over the country's economic outlook worsened. The IMF warned that the Philippines could record the fifth-slowest economic growth in Southeast Asia this year, projecting GDP growth of 3.4%, down from 4.4% in 2025, as weak investment and elevated inflation weigh on economic activity. Growth has remained subdued, with the energy crisis triggered by the Middle East war adding to the lingering fallout from the flood control scandal. The IMF also projected the jobless rate to ease to 5.2% by 2027, but remain above its previous estimate of 4.6%. Continued depreciation of the Philippine peso has intensified calls for central bank intervention, with Michael Ricafort, chief economist at Rizal Commercial Banking Corp., noting that additional interest rate hikes are becoming more likely to help stabilize the currency.