Peso plunges to 59:$1, weakest in over 2 years

MANILA, Philippines —  The peso depreciated for the third straight trading day to close at 59 to $1 yesterday, matching the all-time low last seen in more than two years, amid uncertainty over US economic policies and Philippine monetary policy.

Based on data from the Bankers Association of the Philippines, the local currency slid by nine centavos to close at its intraday low of 59 to $1 from its 58.91 to $1 finish on Wednesday.

This is the same close recorded on Oct. 17, 2022, when the peso reached 59 against the dollar for the 12th time that year amid the aggressive rate hikes by the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP).

The peso opened at 58.93 yesterday. Its intraday best was at 58.92 before losing steam by the end of the day.

Trading volume went down by 22.9 percent to $842.68 million from $1.09 billion on Wednesday.

The local currency has depreciated by P3.63 or 6.2 percent from its 55.37 to $1 close on Dec. 29, 2023.

Jonathan Ravelas, senior adviser at professional services firm Reyes Tacandong & Co., said the peso’s weakness against the dollar reflects the rise in US 10-year Treasury yields, driven by “Trump 2.0” policies, including potential tax cuts and tariffs, which have boosted the dollar.

“This also reflects expectations of rate cuts by the BSP too,” Ravelas added, noting that the trend could persist into 2025. “The near-term risk is the peso breaching the 60 to $1 level.”

A trader likewise said the weaker peso was due to a stronger dollar and uncertainty of Fed direction under Trump’s presidency.

He also said that the peso has weakened due to mixed signals from the BSP, which led to uncertainty in the market regarding future monetary policy actions.

BSP Governor Eli Remolona Jr. earlier said the Monetary Board could hold rates steady next month if inflation pressures intensify, but it could also further lower borrowing costs to support sluggish growth.

The BSP has been slashing borrowing costs since August, lowering the key rate by a total of 50 basis points to six percent. Prior to this, the central bank kept borrowing costs steady for six straight meetings starting November 2023.

“The peso continued to depreciate, closing at the 59-figure level as the ongoing uncertainty on the composition of Trump’s economic team and the escalating tensions between Russia and Ukraine exert increased safe-haven demand for the greenback,” a trader said.

The peso’s struggle against the dollar is expected to persist, with global economic uncertainties and local monetary policy moves continuing to impact the currency.

Remolona said earlier that he is not worried about the peso’s weakness against the dollar and that it is not a significant factor in deciding the country’s monetary policy.