THE SON OF the president who once immortalized the myth of a strong peso during his time has now made history for the opposite reason, presiding over the currency’s weakest level ever.
On Tuesday, the peso hit a new all-time low of ₱59.13 corresponding to one US dollar, slightly breaching the previous record of ₱59 set in October 2022, also under President Ferdinand Marcos Jr.
While the figure may not sound alarming on its own, the reasons behind it seemed causing concerns given the government’s weak response in recent weeks.
CORRUPTION SCANDAL
The peso’s latest depreciation is largely attributed to the flood control scandal embarking on trillions of pesos-worth of substandard and ghost flood-control projects.
“The recent peso depreciation may reflect market concerns over a potential moderation in economic growth due in part to the infrastructure spending controversy, as well as expectations of additional monetary policy easing by the BSP,” the Bangko Sentral ng Pilipinas (BSP) said in a statement.
The United States’ 2025 Investment Climate Report has already flagged the Philippines for pervasive corruption as a major barrier to foreign investment.
Meanwhile, the International Monetary Fund (IMF), Asian Development Bank (ADB), and the ASEAN+3 Macroeconomic Research Office (AMRO) have each lowered their growth forecasts for the country amid governance and external-demand risks.
LACK OF CONFIDENCE
According to former BSP Deputy Governor Diwa Guinigundo, the peso’s fall reflects both fundamental and non-fundamental factors including a large trade deficit, weakened foreign investments, and slower growth in overseas remittances and the BPO sector.
On the non-fundamental side, he cited political uncertainty and poor governance, which drove investors away.
“Number two, there are signs of a culture of impunity. Sinasabi ito may kasalanan, ito tumanggap ng ganito pero ilang buwan na ang nakakaraan, wala pa ring inakusahan. Wala pa ring nakukulong,” he said.
Months after President Marcos’s State of the Nation Address where he exposed alleged corruption in Congress and the Department of Public Works and Highways (DPWH), no mastermind or high-profile suspect has been held accountable.
SANTA TO THE RESCUE
Still, Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael Ricafort believes some relief may be coming for the peso.
He expects the Christmas season and All Saints’ Day to bring seasonal inflows of dollars from overseas Filipinos, as remittances increase and are converted into pesos for holiday spending.
A trader in a Business World report shared the same outlook — “Seasonally speaking, we expect dollar inflows courtesy of remittances. So, we expect natural support for the peso moving forward.”
LOWER INTEREST RATES
The BSP has also been considering further interest-rate cuts this December and into 2026 in response to the projected slowdown in the economy caused by corruption scandals and global trade uncertainties.
Since August 2024, the BSP has reduced rates by a total of 175 basis points (bps), including its most recent 25-bps cut earlier this month, bringing the policy rate to 4.75 percent.
The central bank maintained that the peso will continue to be supported by “resilient remittance inflows, still relatively fast economic growth, low inflation, and ongoing structural reforms.”
It added that foreign-exchange inflows from BPOs, tourism, and OFWs continue to buffer external shocks.
LET THE MARKET DECIDE
Interestingly, the BSP doesn’t seem keen on the idea of going beyond interest cuts even as it maintained that market forces should be allowed to determine the exchange rate.
“We continue to maintain robust reserves. When we do participate in the market, it is largely to dampen inflationary swings in the exchange rate over time rather than prevent day-to-day volatility,” the BSP said.
However, another trader from the same Business World report noted that this stance itself may have pressured the peso further:
“The peso closed at record levels after the BSP ruled out any near-term intervention in the local FX market despite apparent pressures on the local currency.”
ERODED CONFIDENCE
First Metro Investment Corp. Head of Research Cristina S. Ulang said the peso’s decline impacts confidence more than inflation.
“In terms of inflation, the pass-through is really small coming from the peso-dollar weakness, but of course, the confidence level is being eroded by the weak peso,” she said.
Economist JC Punongbayan agreed that even if the BSP steps in, business confidence may not recover immediately.
“As I teach my Macroeconomics students, whenever the peso depreciates to this extent you might expect the BSP to sell part of its dollar reserves to avoid reaching ₱60 per dollar. But the peso’s movement of late may be partly because of an exodus of capital borne by eroded business confidence amid large-scale infrastructure corruption.”
It seems that in this case, only justice can save the economy.