AN analyst warned that the Philippines remains vulnerable during periods of sustained dollar strength given the country’s reliance on imported fuel and other essential commodities.
Unionbank of the Philippines Chief Economist Ruben Carlo O. Asuncion said the peso’s move beyond the P62-per-dollar level reflects the continued dominance of external factors over domestic drivers.
‘While the BSP’s recent 25bp rate hike provides support to the currency, markets remain focused on broad US dollar strength, elevated oil prices, and lingering uncertainty in global financial markets,’ Asuncion said.
He added that demand for dollars from importers and investors has also likely contributed to the peso’s weakness.
Asuncion said this after the Philippine peso plunged to a new record low, moving past the P62-per-dollar level on Friday.
Data from the Bankers Association of the Philippines (BAP) showed the peso closed at P62.265 per $1 on Friday, 37.7 centavos weaker than its previous finish of P61.888.
Meanwhile, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corporation (RCBC), attributed the further weakening of the peso to the ‘local wider trade deficit data amid faster increase in imports compared to exports largely due to the effects of the war on Iran/Middle East since February 28,2026.’
Weak peso: A double-edged sword?
Asuncion explained to this newspaper that a weaker peso benefits remittance-receiving households because every dollar sent home converts into more pesos, helping support consumer spending.
However, he pointed out: ‘It also raises the cost of imports, particularly fuel, energy, raw materials, and other essential goods.’
If sustained, Asuncion warned that the higher cost of imports could contribute to inflation and increase costs for businesses and consumers.
‘The Philippines remains vulnerable during periods of sustained dollar strength given its reliance on imported fuel and other essential commodities. Higher oil prices increase the country’s import bill and may put additional pressure on both the currency and inflation,’ added Asuncion.
Asuncion said the peso is expected to remain volatile in the near term.
He explained that while the BSP’s tightening action should help anchor inflation expectations and temper further depreciation pressures, a ‘more sustained’ recovery in the currency will likely depend on easing oil prices, a softer US dollar, and an improvement in global risk sentiment.
‘For now, external developments remain the key driver of peso movements,’ added Asuncion.
For next week, Ricafort said the US dollar/peso exchange rate could range at 62.00-62.50 levels.