The peso weakened to the ₱59 level against the dollar to open the trading week as escalating geopolitical tensions between the United States (US) and Venezuela spurred safe-haven demand for the greenback.

Local sentiment was further dampened by a more pessimistic medium-term economic outlook from the government’s fiscal planners.

The peso finished Monday, Jan. 5, at ₱59.13 per dollar, according to data from the Bankers Association of the Philippines. The closing level marked the day’s intraday low and represented a significant drop from the ₱58.841 finish recorded on Friday, Jan. 2.

The local currency opened at ₱58.888 and reached an intraday high of ₱58.85 before selling pressure intensified. Trading activity surged, with volume rising to $929 million from $699.13 million in the previous session.

Market analysts attributed the decline to a “risk-off” environment triggered by Washington’s increasingly aggressive stance toward Caracas.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., noted that the geopolitical friction pushed the U.S. dollar toward one-month highs against a basket of major currencies, leaving emerging market assets like the peso vulnerable.

The uncertainty surrounding global energy supplies and diplomatic stability has historically driven investors toward the liquidity of the dollar.

Internal fiscal adjustments added to the downward pressure. Investors reacted to news that President Ferdinand Marcos Jr.’s economic team had revised its foreign-exchange assumptions, signaling a weaker trajectory for the local currency through 2028. The executive branch now expects the peso to trade between ₱58 and ₱60 per dollar over the next three years, a shift from the previous projected range of ₱56 to ₱58.

The adjustment in currency expectations coincided with a downgrade in growth targets. The Cabinet-level Development Budget Coordination Committee lowered its 2026 gross domestic product growth outlook to a range of five percent to six percent, down from a previous estimate of six percent to seven percent.

Economic Planning Secretary Arsenio M. Balisacan indicated that the revisions, finalized in December 2025, were a response to 2025 output likely falling short of initial targets. The move suggests the government is bracing for a period of cooling economic activity amid high borrowing costs and global volatility.