Peso suffers worst fall in 29 months
The Philippine peso retreated to the 58-level on Thursday, suffering its steepest single-day fall in nearly three years, following the US Federal Reserve’s decision to keep interest rates steady.
The local unit ended yesterday’s trading at 58.32:$1, shedding 74 centavos from its previous finish, data from the Bankers Association of the Philippines showed.
This marked its sharpest depreciation since the 1.32-percent drop recorded on Feb. 6, 2023, a period of anxiety over high inflation.
It was also the peso’s lowest finish since Feb. 4, 2025, when the local currency closed at 58.34.
Trading was heavy, with total volume rising to $2.6 billion from $1.9 billion previously.
A trader said the peso depreciated due to the release of “strong” US data and “hawkish” comments from US Federal Reserve chair Jerome Powell—which emboldened the dollar bulls.
The Fed opted to keep rates steady at its meeting this week, shortly after a visit by President Donald Trump to the central bank, during which he had urged American monetary authorities to lower rates.
Moving forward, the US central bank chief did not drop hints of a September cut. Powell also emphasized the importance of maintaining the Fed’s political independence, which, he said, allows policymakers to make difficult decisions based on data, economic forecasts and risk assessments.
At this point, the peso is trading beyond the expectations of the Marcos administration, which sees the peso-dollar exchange rate hovering between 56 and 58 this year.
0.5% to 1.3% July inflation seen
A weaker peso adds pressure on inflation by making imports more expensive.
The Bangko Sentral ng Pilipinas sees another rate cut “on the table” at the Aug. 28 meeting of the Monetary Board (MB), maintaining a dovish stance amid a benign inflation that’s undershooting the central bank’s 2 to 4 percent target range.
A peso that’s stronger than its record-low of 59 has also allowed the BSP to continue with its monetary easing, with Remolona hinting at two more rate cuts for the rest of the year. This, in turn, could help support an economy that is facing external headwinds from Trump’s tariff policies.
The MB has three more policy meetings scheduled this year––in August, October and December.
Remolona previously said the central bank is closely monitoring the inflationary effects of a weaker peso.
He also addressed the newly announced 19-percent US tariff on Filipino goods, saying it helped remove some of the uncertainty that had previously concerned the BSP. He noted that the negotiated rate was expected to have a “modest” impact on economic growth.
