The Philippine peso plunged to a fresh record low of P61.75 against the US dollar on Monday, marking the third all-time trough this month as global pressures continue to weigh on Asian emerging-market currencies.
The peso opened at P61.69 and weakened throughout the trading session, closing at P61.75, 2.9 centavos weaker than its previous record close of P61.721 on May 15. The currency first crossed the 61-per-dollar threshold in late April and has since slid further, hitting new lows on May 14, May 15, and Monday.
Analysts point to a confluence of external factors behind the peso’s slide. Elevated oil prices have increased demand for dollars in oil-importing economies like the Philippines. In contrast, a stronger US dollar and rising US Treasury yields have drained capital from emerging markets. US 10-year Treasury yields climbed to 4.63% on Monday, their highest level since May 2025, and 30-year yields reached 5.127%, levels not seen since 2007.
“The move above 61 does not indicate a failure of the BSP hike. It was beneficial, but stronger forces are influencing the market,” said Robert Dan Roces, economist at SM Investments. He and other observers say high US interest rates and a robust dollar are prompting investors to rebalance portfolios away from riskier assets.
The peso’s weakness mirrors broader trends across the region. MUFG Research reported that the MSCI Emerging Markets Currency Index suffered its worst weekly performance since early March in the week ending May 15, down 0.9%. Oil importers such as India and the Philippines have been particularly hard hit by the combined squeeze of rising energy costs and stronger dollar demand.
Geopolitical tensions have also played a role. The Strait of Hormuz has remained effectively closed for the eleventh consecutive week amid continuing Middle East unrest, pushing Brent crude above $110 per barrel and compounding pressure on oil-importing nations’ currencies.
The Bangko Sentral ng Pilipinas (BSP) has begun tightening monetary policy to counter inflation and currency pressures. In mid-April, the central bank raised its benchmark interest rate by 25 basis points to 4.5%, its first hike in over two years, after consumer inflation surged to 7.2% in April, driven largely by higher fuel costs. BSP Governor Eli Remolona has indicated the bank stands ready to consider additional rate increases if needed.
Still, economists warn that domestic policy may have limited near-term power against the powerful global headwinds. A weaker peso risks feeding through into higher import bills and could keep inflationary pressures elevated in the coming months.
Market watchers say the path for the peso will hinge on several factors: global oil prices, the direction of US interest rates, and broader capital flows into emerging markets. For now, consumers and businesses in the Philippines are already feeling the effects: higher prices for fuel and imported goods, and renewed concerns over inflation stability.
0 Comments