By Aaron Michael C. Sy, Reporter
THE PHILIPPINE PESO breached the P63-per-US-dollar level for the first time on Thursday, as hot US inflation data bolstered bets that the US Federal Reserve could keep rates higher for longer.
The currency fell by 19 centavos to close at P63.06 versus the greenback from its P62.87 finish on Wednesday, Bankers Association of the Philippines data showed. This broke the previous record low of P62.90 on Oct. 8.
The local unit opened the session slightly stronger at P62.83 per dollar and climbed to an intraday high of P62.75.
During the session, the peso hit a record intraday low of P63.15, surpassing its previous low of P62.925 on Sept. 15.
Dollars traded jumped to $1.5 billion from $941 million.
Year to date, the peso has declined by P4.27 or 6.77% from its P58.79 finish on Dec. 29, 2025.
“The peso’s move beyond P63 per US dollar reflects persistent dollar strength following stronger US inflation data, which has reinforced expectations that the Federal Reserve will keep interest rates higher for longer,” Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message.
Dollar demand also continued to be supported by high US Treasury yields, elevated crude oil prices, and geopolitical uncertainties, he added.
Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera also said in a Viber message that the peso’s decline also reflected domestic concerns over inflation and investment inflows.
Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said in a Viber message that the peso was also weighed down by the decline in the country’s gross international reserves (GIR).
The country’s dollar reserves dropped by 8.3% to $99.997 billion in the nine months to September from $109.06 billion seen a year ago.
This was the lowest GIR level in three years or since the $98.116 billion logged in September 2023 and marked the seventh straight month that the GIR contracted annually.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort noted in a Viber message that there could have been intervention from the central bank or smoothening of market volatility towards the P63.10 level, adding that the psychological level had been adjusted from the previous P63 ceiling.
Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. earlier said the central bank does not defend the peso at a specific level at the risk of depleting the country’s GIR, noting they only intervene in the foreign exchange market to smoothen inflationary swings.
“BSP intervention can temper volatility, but peso weakness may persist while the dollar remains strong. A sustained recovery would need stronger dollar inflows, lower import demand or a broader weakening of the dollar,” the first trader said.
The first trader said it will be difficult for the peso to strengthen sustainably as the country remains a net importer.
Meanwhile, analysts expect the dollar-peso to remain volatile in the near term.
A second trader said the peso will likely remain volatile and “quite tilted on the weaker side as the BSP already entered its quiet period for next week’s meeting.”
The second trader said domestic market participants are awaiting how the BSP will react to the latest peso movement.
The BSP has been on a tightening path since April, delivering a total of 75 bps in hikes to raise its key policy rate to an over one-year high of 5%.
The BSP’s next meeting is on Oct. 22.
Mr. Asuncion said the peso could gain support if US inflation eases and Fed expectations become less hawkish, improving global risk sentiment.
“However, as long as the dollar remains broadly strong, the peso is likely to stay volatile and may continue trading near current levels,” he said.
Federation of Philippine Industries Chairperson Elizabeth H. Lee said in a Viber message that the peso’s decline could strengthen exports.
“Export competitiveness depends not only on exchange rates but also on efficient logistics,” she added.
“The weaker peso creates both pressure and opportunity. The key is making sure our ports and supply chains can move as fast as our industries need them to. Fix congestion as soon as possible, and we give Philippine manufacturers a fighting chance to compete and sustain growth,” Ms. Lee said.