Peso Hits Record Low Amid Strong US Dollar and El Niño Risks

The Philippine peso hit an all-time low of 62.59 against the US dollar on Friday, driven by external factors such as a strong US dollar and elevated Treasury yields.

According to Ruben Carlo Asuncion, chief economist at UnionBank of the Philippines, recent domestic political developments may have added to short-term volatility but the broader move remains largely driven by global factors.

The Bangko Sentral ng Pilipinas (BSP) is likely to maintain its bias toward higher interest rates despite a slight softening of inflation in August, as price pressures are expected to remain stubborn in the coming months amid risks from El Niño and possible wage increases.

Deepali Bhargava, Asia-Pacific head of research at ING Bank, said that while headline inflation eased marginally last month, core inflation, which excludes volatile food and energy prices, remained elevated. Risks to food prices also persist, she said.