THE peso fell to a new all-time low of P62.565 to the dollar on Wednesday, weakening by 16.5 centavos from the previous record hit just a day earlier on continued inflation worries, heightened geopolitical tensions and a stronger greenback.
It marked a fourth straight trading day of record lows beginning Thursday, when the peso hit P61.888:$1, Friday’s P62.265, and Tuesday’s P62.40. Philippine financial markets were closed on Monday for a national holiday.
The Philippine Stock Exchange index (PSEi), which had ignored Tuesday’s peso plunge as bargain-hunters snapped up stocks following a drop below 6,000 last Friday, finally took notice.
It shed 40.66 points, or 0.67 percent, to 6,053.23, giving back part of the previous day’s 2.31-percent rebound. The broader All Shares also fell, by 10.58 points or 0.31 percent, to 3,352.61.
The peso fell to as much as P62.69 to the dollar during Wednesday’s session after opening at its previous record low of P60.40. Volume rose to $1.83 billion from $1.31 billion.
The Bangko Sentral ng Pilipinas (BSP) said it was “monitoring the FX market” amid the peso’s continued depreciation.
“The BSP intervenes to address disorderly market conditions and smooth extreme volatility, especially when these can accelerate inflation,” it added.
Union Bank of the Philippines chief economist Ruben Carlo Asuncion attributed the peso’s fall to a strengthening dollar and warned that the currency could drop anew.
“While further depreciation remains a possibility, the currency’s near-term direction will continue to depend primarily on external developments,” he said.
Global financial services group MUFG said it continued to expect the peso to gradually strengthen over time but tagged a possible “Super El Niño” as a key downside risk.
“This could manifest to the Philippines through more extreme weather patterns with possible spillover effects for both global and domestic food prices, with higher second-round effects through inflation expectations,” MUFG said.
Philippine Institute for Development Studies senior fellow John Paolo Rivera said the possibility of the peso testing the P63:$1 level had increased, especially if elevated oil prices, geopolitical tensions, and a stronger dollar persist.
“But 63 is a psychological level, not necessarily a policy trigger,” he said.
“For the BSP, further peso weakness strengthens the case for a cautious, data-dependent stance, particularly if it adds to inflation,” he added.
“However, BSP should respond to the inflationary effects of depreciation rather than defend a specific forex rate level, especially since it has already tightened monetary policy.”
As for the stock market, Philstocks Financial Inc. research manager Japhet Tantiangco said the PSEi pulled back as global yields and oil prices rose amid renewed military exchanges between the United States and Iran.
He added that the peso’s fall to a new record low also contributed to the market’s decline.
Trading was tepid, with net value turnover reaching P5.14 billion, net of extraordinary block sales.
Foreign investors remained net sellers, recording net outflows of P559.82 million.
Market breadth was negative, with 101 decliners against 79 gainers, while 65 stocks were unchanged.
The industrial index was the only sector to finish higher, gaining 0.38 percent, while the services index posted the biggest decline of 1.46 percent.
Luis Limlingan, head of sales at Regina Capital Development Corp., said the PSEi underwent a correction following Tuesday’s strong buying activity.
“Weakness was further driven by the continued depreciation of the peso, which weighed on investor sentiment,” he said.
Softer global markets also prompted investors to take a more defensive stance, Limlingan added.
The renewed external pressures came as investors awaited Friday’s release of August inflation data for further clues on the domestic monetary policy outlook.
The BSP, which raised key interest rates for a third time this year last Thursday amid persistent inflation risks, has lowered its 2026 inflation forecast to 6.1 percent from 6.4 percent.
This is still markedly higher than the central bank’s 2.0 to 4.0 percent target range. Recognizing the potential impact of a severe El Niño and more minimum wage hikes, the forecast for 2027 has been raised to 5.4 percent from 4.5 percent.
