Marcos vows strong defense of weak peso

Philippine President Ferdinand Marcos Jr. has vowed to defend the peso after the currency weakened to new record lows above 64 per US dollar. The peso closed at a record low of P64.17 against the dollar on Tuesday, Oct. 27.

Marcos said the government has “all the tools” and “all the means” to defend the currency. He sought to reassure the public that there was nothing to worry about, saying “people can take solace” in the administration’s stance on supporting the peso. His comments followed a meeting in Manila with central bank and key government officials held a day earlier to discuss the currency’s weakness and related economic pressures.

Marcos highlighted the country’s foreign exchange reserves as a key source of support for the peso, calling them “healthy” and noting that they are drawn upon to defend the currency. The Bangko Sentral ng Pilipinas reported that gross international reserves stood at $99.5 billion at the end of September, providing a buffer against external economic shocks, even though the stockpile had declined from earlier months. Marcos linked the government’s defense strategy to these reserves, emphasizing their role in managing volatility in the foreign exchange market.

The central bank has already taken steps to address market pressures. It intervened in the foreign exchange market to smooth out sharp fluctuations in the peso. In addition, it raised its key policy rate by a larger-than-expected 50 basis points to combat inflation, which it said could be fueled by a weaker currency through higher import costs. Marcos acknowledged these monetary measures but noted that they can only do so much to control overall inflation.

Marcos attributed much of the peso’s recent depreciation to external factors, including rising global oil prices and the resulting increase in domestic fuel costs. He also pointed to the strengthening US dollar as another driver of the exchange-rate move, amid broader economic and geopolitical uncertainties in global markets. The slide in the peso has coincided with elevated international oil prices, raising concern over the Philippines’ oil import bill and related inflationary pressures.

The president stressed that current inflation is being driven primarily by supply-side factors, which limits the effectiveness of monetary policy alone. “Because the inflation is coming from the supply side. So monetary measures can only go so far,” he said. Marcos drew a distinction between oil prices, which he said the government cannot control, and food prices, where it can intervene. He said the administration is pursuing ways to bring down food prices and “doing everything it could” to ease the burden on consumers, though he did not outline specific new measures or provide a timeline.