With the Philippine peso still seen to stay under pressure, Fitch Solutions’ unit BMI expects the Bangko Sentral ng Pilipinas (BSP) to tap its United States (US) dollar reserves to curb wild swings in the US dollar-peso foreign exchange (forex) rate.

“We expect the BSP to expend its reserves to ensure a managed, gradual, and orderly depreciation,” BMI said in an Oct. 30 commentary. This came after the peso hit its weakest-ever level of ₱59.13 against the US dollar last Tuesday, Oct. 28, before gradually recovering.

Japanese financial giant MUFG Bank Ltd. said the local currency “could stay under pressure,” along with other Asian currencies such as the Indonesian rupiah and Indian rupee, as the hawkish stance of the US Federal Reserve (Fed) continues to support the greenback.

“The US dollar strengthened following a somewhat hawkish rate cut by the Federal Reserve, weighing on regional currencies,” said Lloyd Chan, senior currency analyst at MUFG Global Markets Research.

Despite the peso’s recent rebound, BMI said it still expects the local currency to gradually lose ground against the US dollar by the end of 2025, possibly returning to the ₱59 level.

“We still expect the peso to weaken slowly toward ₱59:$1 by year-end, averaging around ₱58 in 2025,” BMI said.

John Paolo Rivera, senior research fellow at state think tank Philippine Institute for Development Studies (PIDS), believes the central bank might have already started selling its reserves to temper volatility or a sharp peso decline.

“Given the recent peso weakness, it is likely that the BSP has already been using its reserves in a calibrated manner to smooth out excessive volatility—not to defend a specific exchange rate level, but to moderate sharp swings that could unsettle market expectations,” Rivera said.

For Michael Ricafort, chief economist at Rizal Commercial Banking Corp., the BSP could “possibly” use its reserves “to smoothen any volatility in the local currency, if necessary.” Ricafort added that stable currency movement is “necessary to better manage importation costs and overall inflation.”

Oikonomia Advisory and Research Inc. economist Reinielle Matt Erece said the BSP appears “to have remained in its managed float regime with regards to foreign exchange,” meaning it allows market forces to determine the forex direction.

As such, Erece expects the BSP to remain on standby but “will avoid letting it reach ₱60:$1 due to its impact on the image of the country’s economy.”

“I expect the BSP to step in by selling off dollar reserves if it reaches the ₱59 level again and readjust its monetary policy stance for longer-term forex intervention,” Erece added.

Meanwhile, Reyes Tacandong & Co. senior adviser Jonathan Ravelas argued that the BSP is unlikely to touch its reserves, saying the recent peso depreciation may simply reflect “adjustments amid tariff uncertainties.”

Ravelas said the country’s fundamentals remain solid, supported by ample buffers such as strong gross international reserves (GIR) and steady remittance inflows from overseas Filipino workers.

As of end-September, the country’s GIR climbed to a nearly one-year high of $108.8 billion—enough to cover more than seven months of imports. The BSP said these reserves are sufficient to defend the peso should it come under pressure.

“Sustained use of reserves is usually reserved for episodes of extreme volatility or speculative activity. For now, interventions are likely measured and tactical, aimed at preventing overshooting while signaling policy readiness to stabilize the currency if pressures intensify,” Rivera said.