The peso fell to its weakest level on record for a second consecutive day, as persistent inflation in the United States (US) fueled expectations that interest rates will remain elevated, dampening appetite for emerging-market assets.

The local currency weakened to ₱61.721 per dollar on Friday, May 15, according to data from the Bankers Association of the Philippines. The slide surpassed the previous record low of ₱61.64 set just 24 hours earlier. The peso opened at ₱61.63 and touched an intraday low of ₱61.73 before slightly recovering by the close.

The decline comes as traders recalibrate their outlook for US Federal Reserve policy. Recent US consumer and producer price data showed inflation remains stickier than anticipated, reinforcing the “higher-for-longer” narrative for American borrowing costs.

Market activity slowed alongside the currency's slide, with total trading volume dropping to $1.119 billion from Thursday's $1.579 billion. Domestic economic uncertainty has added to the selling pressure, leaving the peso vulnerable to further volatility.

Bangko Sentral ng Pilipinas (BSP) officials have previously signaled they are prepared to intervene in the foreign-exchange market to manage excessive volatility. While the central bank typically allows the currency to reflect market fundamentals, traders expect the BSP to provide liquidity at key psychological levels to prevent a disorderly retreat.

“Due to challenges in local fundamentals, the peso might remain relatively weak,” the trader added. ”Occasional BSP intervention could be expected along key levels.”