Philippine peso and market volatility

The Philippine peso has continued its downward trajectory, reaching new record lows against the US dollar. By early September, the currency slid past the 62.50 mark, hitting an intraday low of 62.58 on September 2, driven by escalating geopolitical tensions between the United States and Iran. These hostilities increased global oil prices and strengthened the US dollar as a safe-haven asset, contributing to a 0.67 percent decline in the Philippine Stock Exchange Index (PSEi) and net foreign investor outflows of P559.82 million.

By September 4, the peso closed between 62.59 and 62.71 per greenback, representing a roughly 6 percent loss in value since the start of the year. External pressures remain high as elevated US Treasury yields encourage capital flight toward dollar-denominated assets. Additionally, concerns over oil supply disruptions have increased demand for US dollars as importers convert local currency to purchase dollar-priced crude.

On September 8, the currency hit a fresh record-low closing rate of P62.625 to $1. This depreciation is expected to increase the cost of living for Filipinos by driving up prices for imported essentials such as fuel, electricity, and food. While the weakening peso may benefit overseas Filipino workers through increased remittance values, these gains are often offset by the rising costs of goods and services.

Domestically, market volatility is fueled by political uncertainty and persistent core inflation. Although headline inflation eased to 6.1 percent in August, experts indicate that the Bangko Sentral ng Pilipinas may maintain a bias toward higher interest rates to combat stubborn price pressures, noting that inflation expectations may not return to target ranges sustainably before 2028.