Philippine peso could break 59 per dollar level this year

The peso could breach its record low of PHP 59 this year as Donald J. Trump’s presidency and the Philippine midterm elections may put pressure on the local currency.

“The PHP (Philippine peso) breaching the P59 mark depends on several key factors. Among these are external pressures such as the strength of the USD (US dollar), influenced by the Fed’s monetary policy, and domestic concerns like the trade deficit,” Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said in a Viber message.

On Jan. 3, the local unit closed at PHP 58.20 per dollar, weakening by 29 centavos from its PHP 57.91 finish on Tuesday, Bankers Association of the Philippines data showed.

The Development Budget Coordination Council (DBCC) has said it expects the peso to “broadly stabilize” at PHP 56 to PHP 58 against the US dollar in 2025.

“In the near term, we expect the currency to range between PHP 57.75 and PHP 58.25. The US dollar has managed to still gain its momentum ahead of Trump’s assumption of office on Jan. 20,” Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said in a Viber message.

Mr. Ravelas said the peso could weaken to as low as PHP 60 per dollar this year, noting that Mr. Trump’s protectionist policies and an “assertive stance” on China could influence trade and investment flows.

“The forex rate is anticipated to range within the PHP 57.75 to PHP 60 levels this year, with the USD/PHP closing at around PHP 58.90 by the end of 2025,” he said.

Mr. Rivera said the US dollar’s strength is likely to persist under Mr. Trump’s presidency.

“A stronger USD is likely under Trump, given the previous administration’s fiscal policies, which may keep US Treasury yields high and attract capital back to the US, weakening emerging-market currencies like the PHP,” he said.

On the other hand, the midterm elections in May could increase forex volatility, Mr. Rivera said.

“Markets may anticipate shifts in economic policy or investor confidence depending on the candidates’ platforms and perceived stability post-election,” he said.

Other factors that could influence the peso’s movements this year include global oil prices and remittances from overseas Filipino workers.

“A persistent trade deficit and the narrowing gap in remittance growth could weigh on the PHP further,” he said.

While the volatility can be managed by the central bank’s active intervention, Mr. Rivera said “sustained structural reforms and enhanced economic fundamentals will be necessary to counter global headwinds and stabilize the PHP in the long term.”

University of the Philippines Los Baños economics senior lecturer Enrico P. Villanueva said he is more concerned about forex volatility than the level of the peso against the US dollar.

“I do not foresee significant volatility in the currency, unless a local or geopolitical event happens. Even then, I am confident in BSP’s ability to cushion drastic rate changes,” he said. – Aaron Michael C. Sy, Reporter