MANILA
The Philippine peso declined past the P62 per dollar level Friday, reaching P62.25—a record low—as the currency extended its year-to-date depreciation to more than five percent and signaled duration risk for regional fixed-income investors.
The move breached what analysts had identified as a potential intervention trigger for Bangko Sentral ng Pilipinas authorities. BSP Governor Eli Remolona said Wednesday the central bank will not defend a specific exchange rate but will moderate sharp fluctuations when conditions risk accelerating inflation.
Official data released Friday showed the Philippines' trade deficit expanded to $5.97 billion in July, up from a revised $5.50 billion in June and well above the $5.15 billion economist consensus. Michael Wan, senior currency analyst at MUFG Bank, attributed the peso's weakness to the larger-than-expected deficit, uncertainty about further BSP policy moves and elevated global oil prices.
Wan expects the BSP to continue signaling additional tightening while engaging in foreign exchange intervention to cap USD/PHP volatility. MUFG's 2026 base case forecast for the peso was 60.50 to 61.50 per dollar, with a breach past P62 possible in riskier scenarios.
The currency's depreciation has compressed the relative carry advantage of Philippine fixed-income relative to higher-yielding developed markets, pressuring local equities alongside the trade data. The benchmark PSEi stock index fell as much as one percent Friday and has dropped more than 4.5 percent since end-July, standing at a 1.8 percent year-to-date loss.
Ron Acoba, chief investment strategist at Trading Edge Consultancy in Manila, cited a weaker economy, low consumer and business confidence, persistent inflation and the weakening peso as headwinds. Philstocks Financial maintained a bearish medium-term outlook for equities due to low confidence in the local economy.
