THE Philippine peso strengthened back to the P62-per-dollar territory on Tuesday, appreciating by 40 centavos against the US dollar.
The local currency closed at P62.91, appreciating from Monday's P63.31. This is peso’s strongest close since Oct. 14’s P62.87.
It opened at P63.10 and traded between P62.895 and P63.13:$1. Trading volume reached $1.830 billion, higher than the previous $1.264 billion.
Shares also recovered on Tuesday as investors hunted for bargains following two consecutive sessions of losses, with late-session buying lifting the benchmark index despite continued foreign selling.
The Philippine Stock Exchange index (PSEi) gained 0.67 percent, or 37.85 points, to close at 5,716.15, while the broader All Shares index rose 0.65 percent.
All sectoral indices finished higher except services, which declined 0.99 percent.
Among index members, SM Investments Corp. led the gainers, jumping 6.64 percent, while DigiPlus Interactive Corp. posted the steepest decline at 6.35 percent.
Positive catalyst
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the peso strengthened after the sharp decline in global crude oil prices.
“This is a positive catalyst for global and local financial markets, since it could help ease inflationary pressure and support currency,” Ricafort said.
Ricafort said the peso could appreciate further to P62.5 to P62.75 level on Wednesday.
The Bank of America (BofA) also said the local currency’s sustained recovery remains tied to a significant decline in global oil prices, with crude needing to fall below $70 per barrel to ease the country’s external imbalances and provide support to peso.
“USD-PHP may stabilize around current levels but with high correlation to oil movements,” BofA said.
“Medium-term outlook is unlikely to turn unless oil declines below $70 level,” it added.
Such a correction would help narrow the Philippines' basic balance deficit to around 2 to 2.5 percent of gross domestic product (GDP), making the country's external position more sustainable and reducing pressure on the peso.
BofA said the Philippines had experienced a terms-of-trade shock as higher energy import costs increased the country's external financing requirements.
Energy imports climbed to 4.5 percent of GDP in the first nine months of 2026, from 3.4 percent in 2025, contributing to a wider goods trade deficit.
The country's current account deficit consequently widened to 6.3 percent of GDP in the first half of 2026, sharply higher than the 3.5 percent recorded for the whole of 2025.
Slow remittance growth
Aside from higher oil-related import costs, declining business process outsourcing revenues and slower remittance growth also contributed to the deterioration in the country's external position.
The investment bank said the decline in oil prices could provide some immediate relief, particularly if geopolitical disruptions ease and energy costs moderate.
However, it stressed that the peso's medium-term direction would remain closely linked to the country's basic balance, which measures the current account balance alongside longer-term capital flows.
Bargain hunting
Luis Limlingan, head of sales at Regina Capital Development Corp., attributed the recovery to late-session buying, improving crude prices and bargain hunting after the previous session's sell-off.
Japhet Tantiangco, research manager at Philstocks Financial Inc., said investors picked up shares following two straight days of declines, with positive cues from Wall Street and movements in global oil prices also supporting trading.
Despite the rebound, foreign investors remained net sellers, recording net outflows of P183.81 million.
Trading remained active, with net value turnover reaching P7.21 billion, excluding extraordinary block sales. The market recorded 89 gainers, 83 decliners and 62 unchanged issues.
Limlingan said investor sentiment remained cautious amid lingering macroeconomic uncertainties despite the day's recovery.
