By means of Aaron Michael C. Sy, Reporter
The PESO could break its record low of P59 this year as the presidency of Donald J. Trump and the Philippines’ midterm elections could put pressure on the local currency.
“The PHP (Philippine Peso) crossing the P59 mark depends on several key factors. These include external pressures such as the strength of the USD (US dollar), influenced by the Fed’s monetary policy, and domestic concerns such as the trade deficit,” said John Paolo R. Rivera, Senior Research Fellow of the Philippine Institute for Development Studies in a Viber call. message.
On Jan. 3, the local unit closed at P58.20 per dollar, down 29 centavos from Tuesday’s P57.91, data from the Bankers Association of the Philippines showed.
The Development Budget Coordination Council (DBCC) has said it expects the peso to “broadly stabilize” at P56 to P58 against the US dollar in 2025.
“In the near term, we expect the currency to be between P57.75 and P58.25. The US dollar has still managed to gain momentum ahead of Trump’s assumption of officeFice on January 20,” Reyes Tacandong & Co. said. Senior Advisor Jonathan L. Ravelas in a Viber message.
Mr. Ravelas said the peso could weaken to P60 per dollar this year, noting that Mr. Trump’s protectionist policies and an “assertive stance” toward China could affect trade and investment flows.
“The exchange rate is expected to be between P57.75 and P60 this year, with the USD/PHP closing around P58.90 at the end of 2025,” he said.
Mr. Rivera said the strength of the U.S. dollar was likely to continue under Mr. Trump’s presidency.
“A stronger USD is likely under Trump given the previous administration’s fiscal policies, which could keep US Treasury yields high and attract capital to the US, weakening emerging market currencies like the PHP,” said he.
On the other hand, the May midterm elections could increase the currency’s volatility, Mr. Rivera said.
“Markets may anticipate shifts in economic policy or investor confidence depending on the candidates’ platforms and perceived post-election stability,” 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 further weigh on the PHP,” he said.
While volatility can be managed through the active intervention of the central bank, Mr. Rivera said that “sustained structural reforms and improved economic fundamentals will be needed to counter global headwinds and stabilize the PHP in the long term.”
University of the Philippines Los BaNos economics associate professor Enrico P. Villanueva said he is more concerned about the volatility of the currency than the level of the peso against the U.S. dollar.
“I don’t foresee significant volatility in the currency unless a local or geopolitical event occurs. Even then, I am confident in BSP’s ability to absorb drastic rate changes,” he said.