Peso jumps to 7-week high on rate cut bets

The peso soared to a seven-week high against the dollar on Thursday as faster-than-expected January inflation strengthened expectations of a final rate cut by the Bangko Sentral ng Pilipinas (BSP) this month.

The local unit jumped by 28 centavos to close at PHP 58.69 versus the greenback from its PHP 58.97 finish on Wednesday, data from the Bankers Association of the Philippines showed. This was the peso’s strongest finish since ending at PHP 58.555 on Dec. 18, 2025.

The local currency opened Thursday’s trading session slightly stronger at PHP 58.95 against the dollar, which was already its worst showing of the day. Meanwhile, its intraday best was its closing level of PHP 58.69.

Dollars traded rose to USD 1.436 billion from USD 1.209 billion on Wednesday.

“The dollar-peso traded lower and closed at its intraday low after the BSP signaled that they were nearing the end of their nearing cycle. Feb. 19 might be the last cut before they hold for a while. The latest inflation figure was supportive of BSP’s signal that they should end their easing cycle,” a trader said by phone.

January headline inflation picked up to 2% from 1.8% in December, but slowed from the 2.9% in the same month last year, the government reported on Thursday. This was the fastest in 11 months or since the 2.1% in February 2025, which was also the last time the monthly print was within the central bank’s 2%-4% annual target.

It was also higher than the 1.8% median forecast from a BusinessWorld poll of 18 economists, but was within the BSP’s 1.4%-2.2% estimate for the month.

“The inflation outlook continues to be benign while inflation expectations remain well anchored,” the central bank said in a statement.

It said that while the economic outlook has weakened further as governance concerns and global trade uncertainties continue to weigh on business sentiment, they expect a gradual recovery in domestic demand amid the lagged impact of their previous rate cuts and as the government ramps up its spending.

“On balance, the Monetary Board sees the monetary policy easing cycle as nearing its end. Any further easing is likely to be limited and guided by incoming data,” the BSP added.

BSP Governor Eli M. Remolona, Jr. said on Sunday that a cut is possible at their Feb. 19 meeting if they see the need to support domestic demand.

This, as Philippine gross domestic product growth slowed to a five-year low of 4.4% last year, missing the government’s 5.5%-6.5% target, largely due to the economic fallout from a corruption scandal that affected both public and private spending.

The Monetary Board has reduced benchmark rates by 200 basis points since August 2024, bringing the policy rate to 4.5%.

S&P Global Ratings’ positive outlook for the country also supported sentiment, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message. S&P said in a Feb. 3 report that the Philippines remains on track for a possible credit rating upgrade as improving fiscal and external balances outweigh risks from the government’s flood control controversy.

For Friday, the trader sees the peso moving between PHP 58.50 and PHP 58.90 per dollar, while Mr. Ricafort expects it to range from PHP 58.60 to PHP 58.80. — Aaron Michael C. Sy