Peso slides on higher jobless rate and weak FDI data

The peso slipped past the PHP 57-a-dollar mark on Wednesday as traders reacted to weaker domestic economic data, including a higher unemployment rate and slower foreign direct investments (FDI).

It closed at PHP 57.125 against the greenback, down 14.5 centavos from PHP 56.98 on Tuesday, according to data from the Bankers Association of the Philippines website.

The peso opened weaker at PHP 57.10, touched an intraday high of PHP 57.05, and dropped to as low as PHP 57.195 before settling at the close. Trading volume declined to USD 1.44 billion from USD 1.72 billion the previous day.

“The dollar-peso closed higher due to weaker unemployment data earlier this morning,” a trader said by telephone.

Latest figures from the Philippine Statistics Authority (PSA) showed the jobless rate climbed to 5.3% in July, the highest in three years. The number of unemployed Filipinos rose to 2.59 million from 2.38 million a year earlier and 1.95 million in June.

The increase matched the jobless rate recorded in August 2022 and was significantly higher than the 4.7% posted in July 2024 and the 3.7% in June 2025. Economists said the rise reflected the impact of successive typhoons and monsoon rains, which disrupted hiring during the period.

Weaker foreign investment inflows also dampened sentiment. Preliminary Bangko Sentral ng Pilipinas (BSP) data showed net FDI fell 17.8% to $376 million in June from a year earlier, the lowest since December 2024.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said the weaker FDI data added pressure on the peso, noting that subdued investor appetite could affect near-term currency movements.

For Thursday, the trader expects the peso to trade at PHP 56.90 to PHP 57.30 a dollar, while Mr. Ricafort sees it moving within PHP 57.05 to PHP 57.25.

The dollar held steady on Wednesday ahead of US inflation data this week that could help shape the outlook for Federal Reserve policy, while a fraught geopolitical backdrop underpinned the likes of the Swiss franc.

Employment data in the last week has shown the US economy created far fewer jobs in the last year than expected, which has made a rate cut from the Fed next week look like a certainty.

Yet it has not dented confidence in the equity market, where stocks trade at record highs, nor has it had much immediate impact on the dollar itself, even as investors weigh the chances of a jumbo half-point cut from the Fed next week.

Israel’s attempted killing of Hamas leaders with an airstrike on Qatar on Tuesday, along with Poland shooting down drones that entered its airspace during a Russian attack in western Ukraine on Wednesday, are keeping investors nervous.

“The market has made up its mind, and probably quite rightly, that the Fed is going to be cutting interest rates,” said Jane Foley, head FX strategist at Rabobank. “But for one, there’s been quite a lot in the price in terms of between now and the end of next year.”

“On the other hand, playing in the same direction is the geopolitical uncertainty. There is the Poland news, there is the Qatar news. None of that is reassuring,” she added.

The euro was subdued against the dollar, but jumped as much as 0.5% against the Polish zloty to 4.268 zloty, its biggest one-day rise in three months.

In terms of Fed expectations, traders are fully pricing in a quarter-point cut next week, with a minor chance of a half-point cut. This week’s reports on wholesale inflation due on Wednesday, and consumer inflation on Thursday, could affect that outside prospect of a larger cut, analysts said.

“The bar for a 50-bp move is high, there would likely need to be a clear downside surprise in core inflation to give doves cover,” said Kieran Williams, head of Asia FX at InTouch Capital Markets.

“Given sticky service prices and the Fed’s preference for signaling gradualism, a jumbo cut next week looks unlikely, but the data will shape how aggressively the market prices the easing path into year-end.” — Aaron Michael C. Sy with Reuters