Peso sinks to P59 level again as growth concerns hit sentiment

The peso on Thursday sank to the PHP 59 level against the dollar, hitting an over two-week low, as expectations of another rate cut from the Bangko Sentral ng Pilipinas (BSP) next week due to dimming economic growth prospects weighed on sentiment.

The local unit closed at PHP 59.022 per dollar, weakening by 10.2 centavos from its PHP 58.92 finish on Wednesday, Bankers Association of the Philippines data showed.

This was the peso’s lowest close and was the first time it ended at the PHP 59 level against the greenback in two weeks or since it finished at PHP 59.065 on Nov. 20.

The peso opened Thursday’s trading session weaker at P58.95 against the greenback. Its intraday best was at PHP 58.92, while its worst showing was at PHP 59.17 versus the dollar, which is the local unit’s record-low close logged on Nov. 12.

Dollars traded declined to USD 1.29 billion on Thursday from USD 1.41 billion on Wednesday.

“The peso closed higher today on buying momentum after the recent comments from BSP regarding the local GDP (gross domestic product) outlook and possibilities of a rate cut,” a trader said in a phone interview.

On Wednesday, BSP Governor Eli M. Remolona, Jr. said that Philippine GDP growth may only settle between 4% and 5% this year as the corruption scandal continues to limit government spending and weaken investor sentiment. This would be well below the government’s full-year growth target of 5.5% to 6.5%.

Mr. Remolona said this raises the chances of a fifth straight rate cut at the Monetary Board’s Dec. 11 meeting.

In October, the central bank lowered borrowing costs by 25 basis points (bps) for a fourth meeting in a row to bring the policy rate to 4.75%.

It has reduced benchmark rates by a total of 175 bps since it began its easing cycle in August 2024.

For Friday, the trader said the peso could range from PHP 58.80 to PHP 59.20 versus the dollar.

Still, the local unit is unlikely to stay at the PHP 59 level for long as the expected increase in remittances for the holiday season could give the currency a boost, the trader said.

Meanwhile, the US dollar was steady near a five-week low after lackluster US data seemingly cemented the case for a Federal Reserve rate cut next week, providing relief to the yen and pushing the euro to an almost seven-week high, Reuters reported.

Investors have also been weighing the prospect of White House economic adviser Kevin Hassett taking over as Fed Chair after Jerome H. Powell’s term ends in May. Mr. Hassett is expected to push for more rate cuts.

US President Donald J. Trump said this week he will unveil his pick to succeed Mr. Powell early next year, extending a months-long selection process despite previously claiming he had already decided on a candidate.

A move to appoint Mr. Hassett could pressure the dollar, analysts have said, with bond investors expressing concerns to the US Treasury that Mr. Hassett could aggressively cut rates to align with Mr. Trump’s preferences, the Financial Times reported.

Traders are pricing in an 85% chance of a quarter-point rate cut next week, LSEG data showed.

The dollar index, which measures the US currency against six rivals, was little changed at 98.94 after falling for nine straight days. It was languishing near a five-week low and remains down nearly 9% for the year.

A Reuters survey showed a sizeable minority of foreign exchange strategists are now predicting the dollar to strengthen next year although most largely stuck to forecasts for a softer greenback in 2026 on rate cut wagers. — Katherine K. Chan with Reuters