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Manila Bulletin devider Business devider Banking & Finance devider 'Sufficient' dollar reserves can defend weak peso—BMI

'Sufficient' dollar reserves can defend weak peso—BMI

Published Oct 13, 2025 04:28 pm

At A Glance

  • Fitch Solutions' unit BMI said the Bangko Sentral ng Pilipinas (BSP), despite refusing to intervene in the depreciating peso, has enough international reserves or United States (US) dollar stock to defend the local currency.
Fitch Solutions’ unit BMI said the Bangko Sentral ng Pilipinas (BSP), despite refusing to intervene in the depreciating peso, has enough international reserves or United States (US) dollar stock to defend the local currency.
This comes as BMI expects the BSP to delay another monetary policy easing in December, given that the central bank has already been facing pressure, which has been more evident after the latest rate reduction last week.
After the recent rate reduction, the peso weakened further, closing at ₱58.44 against the US dollar on Oct. 9 from around ₱58 the day before.
Despite the recent peso weakening, BMI said the central bank “has sufficient reserves to defend the currency.”
As of end-September, gross international reserves (GIR) rose to an 11-month high of $108.81 billion, driven by record-high gold reserves and the central bank’s higher investment income.
Notably, gold reserves stood at $16.4 billion, continuing their upward momentum and reaching the highest level since 2000.
Looking ahead, BMI expects no heavier selling of the peso if the central bank cuts rates by 25 basis points (bps) in December.
For BMI, the policy-setting Monetary Board (MB) could proceed with slashing rates further by an additional 75 bps after the latest easing—a quarter of a point in December and 50 bps next year.
This expectation banks on the central bank’s sudden shift to a more dovish tone, which implies “there is room to loosen policy further because inflation is easing and domestic demand is slowing.”
To recall, Philippine gross domestic product (GDP) averaged 5.5 percent in the first semester, following its 5.5-percent growth in the second quarter, which was slightly faster than the first-quarter growth of 5.4 percent.
BSP Deputy Governor Zeno Ronald R. Abenoja said earlier that GDP growth could fall short of the government’s revised target of 5.5 to 6.5 percent for this year.
BSP Governor Eli M. Remolona Jr. also said the central bank now forecasts output growth to fall to 5.3 percent next year, moving further away from the lower end of the annual six- to seven-percent growth goal from 2026 through 2028.
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