By Aaron Michael C. Sy, Reporter
THE PESO tumbled to a new low against the US dollar on Tuesday as hawkish signals from the US Federal Reserve and intensifying Middle East tensions lifted the greenback.
The peso weakened by 13.5 centavos to a record-low P62.40 against the dollar on Tuesday from its previous record of P62.265 on Friday, Bankers Association of the Philippines data showed.
Year to date, the peso has depreciated by P3.61 or 5.79% from its P58.79 finish on Dec. 29, 2025.
The local unit opened Tuesday’s session at P62.25 per dollar, which was already its intraday best. Its weakest showing was its closing value of P62.40, which also surpassed Friday’s intraday low of P62.27.
Dollars exchanged slid to $1.306 billion from $1.96 billion previously.
The peso’s slide to a fresh low reflected a stronger US dollar environment driven by rising US Treasury yields, growing expectations of a rate hike by the US Federal Reserve, and higher oil prices amid escalating geopolitical tensions in the Middle East, Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message.
“These developments have encouraged investors to shift toward dollar assets while increasing inflation and import cost concerns for oil-importing economies such as the Philippines,” he added.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort likewise said in a Viber message that the greenback was generally stronger following hawkish signals from Fed Chair Kevin Warsh at the Jackson Hole Symposium last week.
Mr. Ricafort also said the peso’s decline was tempered by signs that the Bangko Sentral ng Pilipinas (BSP) may have intervened to smooth excessive volatility.
Meanwhile, a trader noted in a text message that the central bank signaled that they will not defend the peso if its decline tracks the region or is in line with the dollar’s general strength.
BSP Governor Eli M. Remolona, Jr. said on Thursday that the central bank can only slow the peso’s depreciation and manage sharp movements rather than defend a specific level as they will run out of reserves.
Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said in a Viber message that the peso is likely to remain under pressure in the near term.
Mr. Asuncion said global factors are likely to remain the primary drivers of the peso’s movement in the coming months, mainly to be led by upcoming US economic data and the Fed’s policy decision later this month.
“Sustained strength in the dollar, elevated global yields, and higher energy prices could keep the [local] currency on the defensive. However, continued support from remittances, BPO (business process outsourcing) revenues, tourism receipts, and foreign investment inflows should help temper excessive volatility,” he added.
Both Mr. Ricafort and Mr. Ravelas expect the local unit to trade within the P62.25 to P62.50 per dollar range in the near term.
Meanwhile, MUFG Global Markets Research Senior Currency Analyst Michael Wan said he expects the peso to hover around P62 to the dollar for the remainder of the year.
“We have shifted our USD/PHP profile slightly higher, and now forecast USD/PHP trading around the P62 levels in second half of 2026 before moving lower towards P61 in the first half of 2027,” he said on Tuesday.
Still, Mr. Wan noted that the peso will gradually strengthen against the dollar, driven by several factors including the potential narrowing of the country’s trade deficit and a growth recovery as its fiscal position improves.
“While there are significant risks from a severe El Niño event, the good news is that we have seen domestic rice prices move into better balance between supply and demand at least over the past two months. Lastly, our model suggests PHP is now slightly undervalued against the dollar,” he said. — with Katherine K. Chan