The peso at P64.17

We just broke through every psychological barrier in a single trading week. On Tuesday, October 27, the peso breached P64 per dollar for the first time in history, sinking to P64.17 as renewed oil price volatility and mounting stagflation worries rattled investors. It was the sixth straight session of record lows and the 33rd time this year that the peso closed at an all-time low. As of October 27, 2026, we have weakened by P5.38, or 9.15%, from P58.79 on December 29, 2025. The official assumption of P60-P62 through 2030 is no longer a forecast. It has already been broken.

No single factor explains this. It is a pile-up.

One, the dollar is strong for the wrong reasons. Safe-haven demand amid geopolitical risks has propped it up, while the Federal Reserve’s higher-for-longer stance has pulled capital back home. Two, oil is our Achilles’ heel. We import 98% of our oil, mostly from the Middle East, so when tensions flared in the Strait of Hormuz, the import bill surged. In April, the trade deficit jumped 49.8% to $6 billion. By May, imports had risen 21.9% to $13.36 billion against exports of $7.87 billion, widening the gap by 50.5% to $5.48 billion. Three, we now have less foreign money to finance that gap. FDI is projected at $6.5 billion this year, and our current account deficit runs at roughly 3.3% of GDP. When the dollars going out exceed the dollars coming in, the peso has to find a lower floor.

How low can it go? The polite range is gone. ING cautioned that the peso could weaken beyond P63, as a shrinking foreign exchange buffer limits the capacity of the Bangko Sentral ng Pilipinas (BSP) to intervene. MUFG now sees it trading around P62:$1 in the second half of 2026 and recovering toward P61:$1 in the first half of 2027, though it could slip past P62 in riskier scenarios. The bear case belongs to JPMorgan and Bank of America, which see it going as low as P65:$1 by the middle of next year. That is not fear-mongering. If oil holds near $100 and our trade gap stays wide, P64 is a speed bump, not a wall.

What keeps us from a free fall are buffers, not bravado. Governor Remolona has been consistent: the BSP does not target a specific exchange rate and steps in only to curb volatility that could fuel inflation. He said it plainly: “We are not hiking the policy rate to defend the weak peso. We do intervene a little bit, mainly to avoid the swings that tend to be inflationary.” That discipline preserves ammunition. The BSP projects reserves to stay above $100 billion in both 2026 and 2027, enough to cover 6.2 months of imports of goods and payments of services, and about 3.1 times the country’s short-term external debt. Then there are the rate hikes, including a jumbo 50 basis points with two more expected this year, plus resilient remittances and services receipts. The BSP will smooth, not burn.

What to watch next? Four dials. First, Fed projections and US jobs data, since a tight Fed means a strong dollar. Second, Brent and Hormuz, where every $10 rise adds a billion to our monthly bill. Third, our trade data and gross international reserves (GIR): if the balance-of-payments (BoP) deficit overshoots the $9.2 billion projection and reserves slip below $100 billion, tolerance thins. Fourth, core inflation after the October 22 Monetary Board meeting. If core keeps climbing, another hike would help the peso only incidentally.

The impact is immediate and uneven. A weaker peso raises the cost of dollar-priced imports such as fuel, as well as the peso cost of servicing foreign-currency obligations. External debt stood at $154.9 billion in the second quarter of 2026, and depreciation means the government needs more pesos to meet the same dollar-denominated obligations. Importers and manufacturers that depend on foreign raw materials and equipment are similarly exposed to higher costs, from power and transport to fertilizer and packaging. That feeds consumer inflation, erodes purchasing power, and cancels out any peso-revenue bump for exporters who also import their inputs.

We have survived every peso crash because we had no choice. Give the country a choice this time: earn dollars, not just borrow them.