The peso slumped to a fresh record low on Wednesday, Jan. 7, closing at ₱59.355 against the United States (US) dollar as escalating geopolitical tensions sparked a sell-off in emerging market assets.

The peso’s finish on Wednesday surpassed its previous all-time low of ₱59.21 set just a day earlier. According to data from the Bankers Association of the Philippines, the currency touched an intraday low of ₱59.38 after opening at ₱59.24. While the peso briefly recovered to ₱59.20 during the session, it failed to maintain those gains as sentiment soured.

The decline follows a military strike by the US against Venezuela, an event that has rattled global markets and fueled expectations that the local currency could weaken to ₱61 per dollar by the end of next year.

Trading volume narrowed to $1.317 billion from $1.386 billion on Tuesday amid cautious environment as investors weighed the implications of the conflict in South America.

Market analysts described the move as a flight to safety. Jonathan Ravelas, a senior adviser at Reyes Tacandong & Co., characterized the sharp depreciation as a “knee-jerk, risk-off reaction” to the US military action.

Ravelas noted that the breach of psychological support levels suggests further volatility ahead, with the exchange rate likely to test the ₱59.50 level in the immediate term.

He projects the pair will cross the ₱60 threshold within the year and eventually reach ₱61 by the end of 2026, driven by geopolitical “noise” and potential shifts in global trade tariffs.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., echoed the sentiment that the US-Venezuela conflict is the primary catalyst for the current pressure.

Ricafort suggested that the peso’s ability to avoid the ₱60 mark in the short term will depend heavily on whether the Bangko Sentral ng Pilipinas chooses to intervene in the foreign exchange market to smooth out volatility.

The peso’s underperformance is part of a broader trend across Asia. Lloyd Chan, senior currency analyst at MUFG Global Markets Research, noted that the Philippine peso, the Indonesian rupiah, and the South Korean won have lagged behind regional peers since the start of 2026.

Chan said this contrasts with the Malaysian ringgit, Singapore dollar, and Thai baht, which have shown more resilience.

Institutional outlooks are turning increasingly bearish, with Metropolitan Bank & Trust Co. revising its forecast, stating that the exchange rate will likely settle at higher levels this year due to weakening investor sentiment.

Metrobank analysts noted that a persistent current account deficit and a rebounding greenback are expected to weigh on the peso, potentially offsetting any benefits from the interest rate differential between the US Federal Reserve and the Philippine central bank heading into 2027.