MANILA, Aug 28 (PROFITECH) — The Philippine peso weakened past 62 to the U.S. dollar for the first time on Friday, opening at 62.05 and falling as far as 62.25 in early Manila trading as inflation concerns and a stronger dollar pressured the currency.
Bankers Association of the Philippines data showed the peso opened at 62.05 per dollar before touching 62.25, setting a new intraday record low.
The move extended losses from Thursday, when the peso closed at a record 61.888 per dollar, down 23.8 centavos from Wednesday’s 61.650. Thursday’s close had already surpassed the previous record low of 61.847 set on July 24.
The latest decline came despite the Bangko Sentral ng Pilipinas raising its benchmark interest rate by 25 basis points to 5% on Thursday, its third increase this year, as policymakers sought to contain persistent price pressures.
Philippine inflation eased to 6.2% in July from 6.4% in June but remained well above the central bank’s 2%-4% target range. The BSP has pointed to volatile oil prices, the risk of a severe El Niño weather event and possible wage increases as threats to the inflation outlook.
“These underlying price risks require preemptive monetary action,” the Monetary Board said after Thursday’s policy meeting.
The central bank also raised its inflation forecast for 2027, adding to concerns that price pressures could remain elevated even as economic growth slows. The Philippine economy expanded just 2.3% from a year earlier in the second quarter, its weakest growth rate since 2021.
Currency traders are also watching developments in the United States. The dollar held near a one-week high on Friday as investors awaited Federal Reserve Chair Kevin Warsh’s speech at the Jackson Hole economic symposium for clues on the path of U.S. interest rates.
A weaker peso can raise the local cost of imported goods such as fuel, food and industrial inputs, potentially adding to domestic inflation. BSP Governor Eli Remolona Jr. has said the central bank does not target a specific exchange rate but seeks to limit sharp currency movements.
“If the peso weakens sharply, the exchange rate has a stronger impact on inflation,” Remolona said during a Senate hearing. “So what we do is manage sharp movements in the exchange rate.”
Markets will next focus on Warsh’s Jackson Hole remarks later Friday for signals on U.S. monetary policy, while the BSP is scheduled to release its next Monetary Policy Report on Sept. 4.
