Philippine Peso Falls to Record Low Despite Jumbo Rate Hike

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.

The Philippine peso depreciated past 62 per dollar on Friday, hitting a new all-time low as concerns over the domestic inflation outlook kept pressure on the currency. The move came despite the Bangko Sentral ng Pilipinas raising its policy rate by 25 bps to 5% in a third straight hike, described as a preemptive move. The BSP raised its 2027 inflation forecast to 5.4% from 4.5%, citing risks from severe El Niño conditions and higher minimum wages, while lowering its 2026 forecast to 6.1% amid easing oil prices. Still, elevated oil prices continue to pose a risk to the peso, as the Philippines imports almost all of its oil needs, potentially widening the current-account deficit and adding to domestic inflation pressures. Governor Eli Remolona said the central bank would focus on smoothing sharp currency movements rather than defending a specific exchange-rate level. The peso has now lost more than 5% against the dollar this year, leaving it among Asia’s weakest performers.