Peso seen sinking to 60:$1 in Q1 ’26
The peso’s slide may deepen once the seasonal lift from holiday remittances fades, though a gradual recovery is expected later in 2026, according to ANZ Research.
In a note to clients, the bank said the currency could weaken to around 60 to the dollar by the end of the first quarter of 2026, before clawing back ground at a measured pace over the rest of the year.
While the remittance season helped steady the peso, ANZ said those gains were limited by a widening corruption scandal that has clouded the growth outlook and sapped investor confidence.
“The peso failed to register notable gains during the peak remittance season (November to December) this year, as underlying fundamentals remained unfavorable,” they said. “Although the current account deficit is projected to narrow in 2026, it will continue to exert a significant drag on the peso.”
On Dec. 8, the peso posted a new record-low of 59.22, which unfolded against a backdrop of slowing growth and deepening political fallout.
After data showed the economy expanding by just 4 percent in the third quarter, its weakest pace in more than four years, President Marcos’s economic team conceded that official macroeconomic targets may need to be revised to reflect the strains created by the antigraft drive.
The scandal—which has implicated lawmakers, Cabinet members, government engineers and several private contractors—has been widely blamed for undermining business sentiment and complicating the central bank’s monetary easing campaign.
A weaker peso carries mixed consequences for the Philippines. It boosts the domestic value of remittances sent home by millions of overseas workers, supporting consumption in an economy that relies heavily on these cash transfers.
But it also risks driving up import costs and reigniting inflation. Prolonged depreciation, meanwhile, inflates the peso value of foreign debts held by the government and private firms.
The Bangko Sentral ng Pilipinas (BSP) has signaled it will allow market forces to determine the exchange rate, intervening only if a sustained downturn threatens to fuel imported inflation rather than to smooth out day-to-day volatility.
Looking ahead, ANZ said prolonged economic weakness and a deeper-than-expected BSP rate-cut cycle “represent key downside risks to the peso’s trajectory.”
“We maintain our forecast for one additional 25-basis point cut in the first quarter of 2026, as economic momentum is expected to remain weak at least until the second half of next year,” they added.
