The Philippine Peso (PHP) has recently been under pressure, influenced by several key economic factors and developments. On August 28, 2025, the Bangko Sentral ng Pilipinas (BSP) implemented a third consecutive interest rate cut, reducing the benchmark rate to 5.0%. This decision reflects a response to easing inflation levels, even as the annual inflation rate rose to 1.5% in August, driven primarily by higher housing, utility, and food costs. Despite this rise, the year-to-date inflation average remains below the BSP's target, indicating a cautious approach to monetary policy.
The trade and current account deficits pose significant challenges to the PHP, with the country reporting a trade deficit of $54.21 billion in 2024. Analysts note that these persistent deficits have contributed to a weakening of the peso, alongside concerns regarding its overvaluation since 2019, which has hampered competitiveness in the manufacturing sector and affected export performance.
Recent exchange rates show the PHP at notable lows against several major currencies. The PHP to USD is trading at 90-day lows around 0.017009, a decline of 2.1% from its three-month average of 0.017382. The stability of this currency pair has been observed within a 4.1% range. Furthermore, the PHP to EUR has also dropped to similar 90-day lows at 0.014603, representing a 1.9% decrease from its three-month average. In the case of the PHP to GBP, it reached 14-day lows of 0.012754, trailing by 1.4% from its average. Despite this, the PHP to JPY remains slightly above its three-month average at 2.5966, having exhibited relatively stable trading conditions.
These developments suggest a complex interplay of domestic economic policies and external market dynamics influencing the performance of the Philippine Peso. Stakeholders are advised to stay informed on these economic indicators as they navigate currency transactions.
