THE Philippine peso may ‘gradually’ regain some strength as new US tariff exemptions on key food products could offer a modest cushion for the currency, though domestic spending issues remain the larger drag.
Japanese bank MUFG Global Markets Research said in a note that the Philippines could benefit from the recent tariff exemptions on food products, which could provide some relief to the local currency.
The US recently excluded several agricultural products, including coffee, cocoa, bananas, beef and other food items, from President Donald Trump’s latest round of tariffs.
MUFG said this is a ‘sign that perhaps tariffs are having a bigger negative impact on US consumers and key constituencies than the administration would publicly admit.’
In particular, up to 6 percent of the Philippines’s total exports to the US, including items such as coconut oils, will now be exempt, MUFG said.
While this relief may help ease some pressure on the local currency, the peso’s larger challenges remain homegrown, MUFG noted.
The bigger macro driver for the peso, MUFG said, are the corruption issues tied to flood-control projects and their negative spillovers to government spending.
‘We are nonetheless hesitant to be too bearish on PHP at current levels of the 59 handle,’ MUFG said.
The local currency is seen to gradually appreciate toward the P58 level, driven by a weaker US dollar and a pickup in public expenditure once budget implementation normalizes, potentially by the first half of 2026.
The Philippine peso rebounded on Monday, back at P58 levels after opening at P59.055, data from the Bankers’ Association of the Philippines showed.
The local currency closed at P58.931 against the greenback, and traded for as high as P59.19 and as low as P58.91.
The peso weakened to an all-time low of P59.17 against the US dollar last week, weighed down by local governance issues and strong global demand for the greenback.