The Philippine peso (PHP) has faced significant headwinds recently due to geopolitical tensions and domestic political uncertainty. Analysts have pointed to the imposition of a 17% reciprocal tariff on Philippine goods by the US, which is part of a broader trade conflict under the Trump administration. This development could weigh on the peso, building pressure on an already vulnerable currency.
Recent forecasts from ABN Amro suggest that the peso's valuation may be overinflated, anticipating a depreciation against the US dollar (USD) as early as 2025. This expectation stems from concerns over the Philippines' weaker external balances, further exacerbated by external pressures due to tariffs affecting regional trade dynamics.
The upcoming mid-term elections in the Philippines have introduced additional political uncertainty, primarily following the arrest of former president Rodrigo Duterte on alleged human rights violations. While mid-term elections typically do not lead to major policy shifts, analysts caution that this situation could enhance volatility in the currency markets.
Recent price data indicates stability in key PHP pairs, with the USD/PHP trading at approximately 0.017696, just shy of its three-month average. The PHP is also facing challenges against the Euro (EUR) and the British pound (GBP), with current rates around 0.014993 and 0.012962, respectively, both reflecting notable declines from their three-month averages. In the case of the Japanese yen (JPY), the PHP trades at 2.5389, marking a relative low in the past two months.
Emerging market currencies, including the PHP, are under pressure as market sentiment shifts negatively following additional tariffs from the US on China. Unlike some of its Asian counterparts, the Philippines has not significantly benefited from the global supply chain diversification trends. As such, the outlook for PHP remains cautious, with increasing scrutiny from analysts on its stability amid various pressures.
