November 3, 2025 | 12:00am
The Philippine peso stabilized last Thursday after rebounding from a record low. It closed at P58.85 per dollar following a volatile week that saw the currency breach the closely watched P59 level.
The peso had weakened to an intraday record of P59.26 per dollar on Wednesday before recovering to P58.69 later in the day, according to data from the Bankers Association of the Philippines. Trading was calmer on Thursday, with the peso holding within a narrower range as sentiment improved after the US Fed cut its policy rates.
Testing historic levels
The peso’s drop beyond P59 marked its weakest level on record, but it has repeatedly bounced from this threshold since 2022. The level has long been viewed as a line in the sand for traders, with the Bangko Sentral ng Pilipinas (BSP) often stepping in to curb sharp swings.
Fed cuts rates
The peso’s rally followed the Federal Reserve’s quarter-point rate cut on Oct. 29, which lowered its benchmark rate to a range of 3.75 percent to 4.00 percent. The move which followed a similar cut by the BSP early October, has widened the interest rate gap, giving the peso breathing room.
With the BSP’s policy rate at 4.75 percent, the Philippines maintains a significantly higher yield compared to US rates. This should make peso-denominated assets more attractive to yield-seeking investors and provide support for the peso after its recent slide.
BSP’s steady hand
The central bank has reiterated its commitment to maintaining orderly market conditions. While officials have not confirmed direct intervention, traders speculate BSP presence in the spot market whenever volatility spikes. Governor Eli Remolona Jr. has said the peso’s value should reflect fundamentals but stressed that “excessive movements” will be managed.
Seasonal support
Seasonal inflows may bolster the peso through the year-end. December is historically the peak month for overseas remittances, which typically rise by 20 percent to 25 percent above monthly averages. Inflows are projected to reach around $3.8 billion this year. This may provide ample foreign-exchange liquidity and additional support for the peso after months of pressure.
Peso’s performance year-to-date
The peso remains one of Asia’s weaker performers this year, down by 1.7 percent against the dollar, compared with gains of 6.8 percent for the Taiwan dollar, 6.6 percent for the Malaysian ringgit and five percent for the Thai baht.
Major currencies have rallied strongly led by the Norwegian krone (+13 percent), Swiss franc (+12.3 percent) and euro (+11.1 percent). The broad decline in the US dollar index — down by 7.9 percent this year — has lifted most developed-market currencies but provided limited relief for Asia’s more vulnerable currencies.
Short term relief, lingering risks
While the peso’s rebound offers some relief, challenges remain. Fragile investor sentiment, massive corruption issues and wide fiscal and current-account deficits continue to weigh on confidence.
But if Fed easing continues and remittance inflows reach their seasonal high in December, the currency could firm toward the P58 level. With gross international reserves at $109.1 billion, the BSP has ample capacity to maintain orderly market conditions as inflows build toward year-end.
Philequity Management is the fund manager of the leading mutual funds in the Philippines. Visit www.philequity.net to learn more about Philequity’s managed funds or to view previous articles. For inquiries or to send feedback, please call (02) 8250-8700 or email [email protected].
