The Philippine peso weakened against the United States (US) dollar Thursday, slipping back to the ₱59 level amid mounting expectations that the Bangko Sentral ng Pilipinas (BSP) will deliver a further rate cut by year-end.
The local currency closed at ₱59.022 per dollar, down from ₱58.92 on Wednesday. It fell to an intraday low of ₱59.17, matching the current weakest-ever closing level reached on Oct. 28. The previous record low was ₱59.13 per dollar on Oct. 28.
The peso touched an intraday high of ₱58.92 after opening at ₱58.95. Total trading volume declined to $1.287 billion from Wednesday’s $1.414 billion.
Angelo Taningco, chief economist at Security Bank, attributed the peso’s decline to market anticipation of another reduction in key borrowing costs at the Monetary Board's (MB) final policy meeting next week.
He suggested the dovish move is intended to “cushion” the economy from a further slowdown.
The BSP has already reduced key interest rates by 175 basis points (bps) in its easing cycle since August last year, bringing the rate to the current 4.75 percent from 6.5 percent.
Taningco noted the central bank’s dovish stance amid lower growth expectations “may have also contributed to peso weakness.” A weaker economic growth outlook typically weighs on the local currency.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said sentiment softened after the Organization for Economic Co-operation and Development (OECD) and local agencies trimmed their $2025$ gross domestic product (GDP) forecasts. This signaled the government may miss its growth target of at least 5.5 percent for the year.
The OECD now forecasts Philippine GDP growth to reach 4.7 percent in 2025, 5.1 percent in 2026, and 5.8 percent in 2027, despite sustained private consumption.
BSP Governor Eli M. Remolona Jr. admitted that the economy’s lackluster performance raises the odds of another reduction in the key lending rate, though he characterized the move as a possibility, not a guarantee.
Ricafort forecasts the dollar-peso exchange rate to hit a weaker ₱59.15:$1 Friday, Dec. 5.
John Paolo Rivera, senior research fellow at state policy think tank Philippine Institute for Development Studies (PIDS), summarized the pressure points as a combination of softened sentiment toward the domestic economy and stronger global demand for the US dollar.
“Externally, the US dollar remains strong because markets expect US rates to stay higher for longer, pushing investors toward safer dollar assets,” Rivera said.
“Domestically, weak third-quarter growth, delayed government spending, and lingering confidence issues have made investors more cautious, reducing foreign inflows and putting additional pressure on the peso,” he added.