Peso hits record low near ₱64 per dollar

The Philippine peso closed at a new historic low of ₱63.95 per US dollar on Monday, October 26, bringing it within five centavos of the ₱64 level. The currency weakened by 33.5 centavos from its previous record close of ₱63.615 on October 23, extending a run of all-time lows. This latest move marked the peso’s 37th record low this year and its sixth in October, as it continued to test new troughs against the greenback.

Intraday, the local unit opened the session at ₱63.535 per dollar, reached an intraday best of ₱63.50, and then slid to its closing level of ₱63.95, which also marked the day’s high. The weighted average exchange rate eased to ₱63.859 from ₱63.453 the previous trading day. Dollar turnover increased, with total trading volume rising to about $1.649 billion from around $1.285 billion, underscoring strong demand for the US currency.

Market participants cited escalating geopolitical tensions in the Middle East and between the United States and Iran as key drivers of the peso’s latest decline. Renewed US threats to “finish off” Iran and tighter restrictions on oil transit through the Strait of Hormuz have added to global uncertainty. Brent crude prices peaked at $117 a barrel over the weekend, a trader said.

Higher oil prices have supported the US dollar and reinforced demand for foreign exchange from domestic importers. Analysts also pointed to prospects of a US Federal Reserve rate hike and a potentially more hawkish stance as additional headwinds for the peso. These external pressures have combined with domestic concerns, leading to what one market trader described as persistent risk of the exchange rate breaching the ₱64-per-dollar level.

Several economists highlighted eroding investor confidence amid growing fears that the Philippines could face a period of stagflation. Headline inflation accelerated to 7.2% in September, the fastest pace in five months and matching a previous peak seen earlier in the year. The pickup in prices has been driven mainly by more expensive food, power, and fuel, while the peso’s purchasing power stayed at a record low of ₱0.73 in September, unchanged from August and April.

On the growth side, the economy slowed to 2.3% in the second quarter of 2026, a post-pandemic low that fell short of the government’s minimum full-year target of 3.5%. Labor market conditions have improved from a recent spike but remain weaker than a year earlier, with the unemployment rate at 5.3% in August compared with 3.9% in August 2025. Analysts warned that the combination of high inflation, softer growth, and elevated joblessness heightens concern over the impact of a sustained currency slide.

The Bangko Sentral ng Pilipinas has responded to inflation and currency pressures with a series of policy rate increases. On October 22, the Monetary Board delivered a 50-basis-point hike, lifting the benchmark interest rate to 5.5%, a nearly two-year high. Cumulative rate hikes since April have reached 125 basis points, and authorities have described their stance as hawkish, while signaling that policy may not yet be sufficiently restrictive.

Despite this tightening, the peso has continued to weaken, leading analysts to conclude that higher interest rates alone may not be enough to stabilize the currency. The country’s external accounts have also come under strain, with a balance of payments deficit of $3.144 billion in September, significantly wider than the $596-million gap in August and reversing an $82-million surplus a year earlier. This marked the third straight month of deficit and the largest monthly shortfall in nearly two years, adding another layer of pressure on the peso and reinforcing concerns about its near-term trajectory.