THE PHILIPPINE PESO is no longer merely hitting record lows; it is breaking them so frequently that each new “all-time low” feels less like a shock and more like a pattern.
On January 7, 2026, the Philippine peso sank to a fresh historic low against the U.S. dollar, closing at P59.355 to $1, surpassing its previous all-time record set in December 2025.
FURTHER RATE CUTS
Rizal Commercial Banking Corp. Chief Economist Michael Ricafort pointed to dovish signals from the Bangko Sentral ng Pilipinas (BSP), particularly the possibility of another 0.25 percentage-point rate cut, which could further narrow the interest rate differential with the U.S. Federal Reserve.
The BSP had already cut its benchmark interest rate by a quarter point to 4.5 percent in December, while economists are expecting another 0.25 percent cut in the first quarter of 2026.
BSP Governor Eli Remolona Jr. had earlier signaled that the central bank’s easing cycle could end with just one more rate cut, unless “bad surprises” emerge that would justify further reductions.
The government has also remained firm in allowing market forces to determine the exchange rate.
WORSENING CLIMATE
Ricafort also cited other factors, such as higher unemployment and mounting national government debt, as contributors to the peso’s weakness.
“On external developments, the dollar-peso rate also moved higher after the U.S. dollar index climbed to near one-month highs, amid a shift toward safe-haven assets such as gold and the U.S. dollar, as investors turned risk-averse,” he said.
Reyes Tacandong & Co. senior adviser Jonathan Ravelas echoed this view, describing the peso’s slide as a “knee-jerk, risk-off reaction.”
NOTHING NEW
While this new record—and the broader peso trend—is alarming, it is not an isolated event but the latest in a series of all-time lows stretching from 2025 into 2026.
In October 2025, the peso first breached the P59-to-$1 level, closing at P59.13, then a historic low.
Notably, the cited causes are also not new.
The decline was largely attributed to the flood control scandal, which involved trillions allegedly lost to substandard and ghost projects.
OUTLOOK DOWNGRADES
The controversy dented investor confidence and prompted growth outlook downgrades from institutions such as the International Monetary Fund (IMF), Asian Development Bank (ADB), and the ASEAN+3 Macroeconomic Research Office (AMRO).
The currency continued to weaken in early December 2025, hitting P59.22 as markets braced for another BSP rate cut.
Philippine Institute for Development Studies (PIDS) Senior Research Fellow John Paolo Rivera said that, aside from a strong dollar, “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.”
POOR GOVERNANCE
Former BSP Deputy Governor Diwa Guinigundo earlier remarked during the October peso drop that political uncertainty and poor governance were driving investors away, citing a growing “culture of impunity.”
Entering 2026, justice remains elusive, as public attention faded over the holidays and accountability stalled.
Economists have been consistent in warning that the massive corruption scandal in infrastructure projects and the slow, selective pace of investigations continue to weigh on economic confidence.
TRUST FACTOR
Ricafort said potential positives for the peso include “some progress in the judicial process related to the anomalous or controversial flood-control infrastructure projects, such as arrests, cases filed, asset freezes, and other enforcement actions.”
But if the peso’s trajectory is any indication, trust and confidence in the economy are also at record lows.
Both Ricafort and Ravelas believe the peso could soon breach the P60 mark and slide toward P61 by the end of the year.
Ricafort added that the peso’s ability to avoid the P60 threshold in the near term will depend heavily on whether the BSP intervenes in the foreign exchange market to smooth volatility.