Emerging market (EM) currencies, including the Philippine peso, are deemed safe from any currency crisis, despite lingering risks stemming from geopolitics and trade uncertainties.

Across EMs, “financial vulnerabilities generally look low,” William Jackson, chief emerging markets economist at think tank Capital Economics, said in a Jan. 14 report.

Capital Economics’ aggregate EM risk indicators monitor banking, currency, and sovereign risks.

In particular, the think tank said its indicators show that “currency crisis risks are near decades-low.”

“Currency crisis risks are low at a country level, too, particularly in the larger emerging economies,” it added.

In its EM currency risk indicator, where a score of 0.5 is deemed high risk, the Philippine peso scored below 0.2. The Egyptian pound and Argentine peso, however, are facing a high risk of falling into a currency crisis.

However, Capital Economics said that “widening current account deficits in a handful of large EMs need to be monitored,” including in the Philippines, Brazil, Chile, Colombia, Indonesia, and Poland.

Based on updated 2025-2026 balance of payments (BOP) forecasts released by the Bangko Sentral ng Pilipinas (BSP) last December, the current account deficit in 2025 is seen easing to 3.2 percent of GDP, marginally narrower than the central bank’s previous projection of 3.3 percent.

For 2026, the current account deficit—the shortfall in the sum of the economy’s transactions with the rest of the world—is seen further narrowing to three percent of GDP, although wider than the earlier forecast of 2.9 percent.

As of end-September 2025, the current account deficit stood at 3.6 percent of GDP, narrower than the full-year shortfall equivalent to four percent in 2024.

A current account deficit puts depreciation pressure on the peso against the United States (US) dollar. On Thursday, Jan. 15, the peso slid to a new historic low of ₱59.46 versus the greenback.

In a Jan. 14 report, Dutch financial giant ING noted that “concerns over softer gross domestic product (GDP) growth have weighed on the Philippine peso.”

ING flagged recent data suggesting weak government spending, which it said may continue to weigh on private sector confidence, with GDP growth forecast at 5.4 percent in 2026 and risks skewed to the downside. The government targets five- to six-percent growth this year, a less optimistic outlook than six to seven percent previously.

As such, “we expect the Bangko Sentral ng Pilipinas (BSP) to deliver further easing in the first quarter of 2026 as growth underperforms,” ING said.

“External imbalances add pressure,” ING added, citing the sharp swing of the Philippines’ BOP position into a deficit as of end-October 2025, which reversed the small BOP surplus in 2024.

“Despite recent peso weakness, the BSP Governor [Eli M. Remolona Jr.] noted limited pass-through to domestic inflation. On balance, we expect the BSP to maintain a less defensive stance, keeping the Philippine peso biased to the downside over the medium term,” ING said.

ING forecasts the peso to be “mildly bearish” in the next 30 to 90 days and to continue trading in the spot market around the ₱59:$1 level.

Six months to a year from now, the peso is expected by ING to stabilize at the weaker ₱59.5:$1 threshold.

Japanese financial giant MUFG, meanwhile, said that while the US dollar has been “marginally weaker,” high-yielding Asian currencies like the peso, Indian rupee, and Indonesian rupiah have “underperformed.”

“The rise in oil prices is likely one key factor weighing on some Asia foreign exchange (FX) in the near term,” MUFG Global Markets Research senior currency analyst Michael Wan said in a Jan. 15 report, maintaining their stance that the peso, rupee, South Korean won, and Thai baht are the regional currencies most vulnerable to oil price spikes.

“Further oil price increases are not our base case, and we will look to see if the likes of the Philippine peso retrace some weakness on these recent oil price moves,” Wan said.