ONLY by beefing up exports can government prevent the Philippine peso from weakening further, the central bank governor told lawmakers as the local tender plunged to a new record low on Thursday.
During a briefing at the Senate, Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona Jr. told lawmakers that the exchange rate itself is ‘something very hard to fix’ for a country like the Philippines.
The day the BSP chief spoke, the peso plunged to a new record low of P61.888 against the dollar. The level is 23.8 centavos weaker than its previous finish of P61.65 against the greenback last Wednesday, data from the Bankers Association of the Philippines showed.
Remolona explained to members of the Senate Committee on Finance last Thursday that the country’s outbound shipments are ‘expensive’ and ‘inadequate,’ making it difficult to stop the local currency from further weakening.
‘Our current account deficit is about 13 percent of our GDP [gross domestic product],’ Masyadong mahal ang exports natin; kulang na kulang ang exports natin,’ the central bank governor said during the briefing by members of the Development Budget Coordination Committee (DBCC). ‘So mahirap pigilin ang pagbaba ng peso. Pwedeng pigilan para mabagal pero hindi kayang i-fix; hindi pwedeng P60 lang, mauubusan tayo ng reserves, ng dollars.’
[Our exports are not only too expensive but sorely lacking in volume. So it’s difficult to stop the peso from falling. You can slow its slide, but it can’t be fixed. It’s rate can’t be just P60 as we’ll run out of reserves and dollars.]
Pax Silica
REMOLONA, who sits in the DBCC as resource person, shared his hopes for the peso.
‘Pero sana lumakas ang exports natin; kulang na kulang eh. ‘Yun ang ating challenge dito sa exchange rate,’ he said. [But I still hope our exports will strengthen as it’s really lacking in volume. That’s our challenge here with the exchange rate.]
Remolona, nonetheless, noted government initiatives to boost exports, such as US-led strategic investments in Luzon.
‘Gumawa tayo ng paraan na palakasin ang exports. Halimbawa yung Pax Silica [manufacturing and industrial hub in New Clark City], maaaring makatulong sa exports yan; also the Luzon Economic Corridor (LEC) nakatutok yan sa exports,’ the central bank governor said.
A post by the US Embassy in the Philippines last May explained that the LEC is ‘a trilateral initiative of the United States, Japan, and the Philippines.’
‘It engages partners-including Australia, Canada, Denmark, France, Italy, the Republic of Korea, Sweden, and the United Kingdom-to catalyze mutual economic growth, create jobs, strengthen connectivity, and improve transport and logistics, energy, and digital infrastructure along the corridor connecting Subic Bay, Clark, Manila, and Batangas.’ (See https://ph.usembassy.gov/fact-sheet-luzon-economic-corridor/)
However, Remolona said ‘it may take some time before we can do it [strengthen exports].’
Savings, investments
ANOTHER factor that Remolona considered in the peso-dollar exchange rate is the country’s current account.
He explained that the country’s savings is way below the country’s investments, hence the current account deficit.
‘Ang isa ang consideration dyan ‘yung savings rate natin. Kasi pag binilang yung remittances and BPO [revenues], ang diperensya ng pumapasok na pera ang tawag dun ‘yung current account,’ Remolona told lawmakers.
‘Matagal nang negative ‘yung current account natin. Hangga’t maaari sana tumaas ang savings natin, ‘yun ang long-term solution. Medyo mahirap sabihin to pero mayabang tayo. May consumption culture,’ he added.
And for the country as a whole, the BSP governor said: ‘Mas malaki ‘yung investments kaysa savings e. Para ma-finance ‘yun, uutang tayo abroad.’
Remolona spoke on the first day of Senate deliberations on the proposed 2027 national budget with the DBCC, a Philippine inter-agency body that reviews and approves macroeconomic targets, revenue projections, borrowing levels, and expenditure priorities for the budget.
Current accounts
IN an article in the BSP-published book launched last June, the central bank emphasized that managing the current account is ‘becoming increasingly challenging’ for the Philippines.
The book titled ‘Current Account Dynamics and the Philippine Economy: Developments and Prospects’ pinned the challenges on the pattern of the country’s economic development that is diverging sharply from the traditional industrialization route followed by many successful East Asian economies, which evolved from agriculture to industry on the way to a services-dominated economy.
‘This ‘premature de-industrialization’ of the economy, characterized by a weak industrial base and underdeveloped agriculture, combined with excessive dependence on low-productivity services, presents various challenges for CA management in the country,’ the BSP book noted.
Despite the resilient remittance inflows and the ‘booming’ information technology and business process management (IT-BPM) industry, book authors, who included Remolona, noted that long-standing trade deficits in goods suggest that its structural weaknesses persist.
Trade gap
DATA from the Philippine Statistics Authority (PSA) showed that the country’s trade gap widened in the first half of 2026 as the country’s import payments soared to a 35-year high.
Based on the ‘International Merchandise Trade Statistics,’ the country’s import bill in January to June rose by 17.8 percent to $77.53 billion from $65.79 billion in the same period last year.
The PSA said the latest figure was the highest first-half import value since the trade series began in 1991.
Export earnings rose by 13.1 percent to $46.72 billion in the first half, but this was slower than the recorded increase in imports. As a result, the country’s trade deficit widened by 25.9 percent to $30.81 billion from $24.48 billion a year earlier.