The Philippine peso hit new all-time lows against the US dollar, with the USD/PHP exchange rate nearing 63.16 in mid-October 2026 trading. That’s the peso’s 27th record low this year, meaning it’s dropped about 7% since January.
On Thursday, the USD/PHP pair touched an intraday record of 63.15 before settling at 63.06, according to data from the Bankers Association of the Philippines.
So far this year, the peso has weakened over 6% since late 2025, when it traded around 58.80. This sharp rise in the exchange rate raises worries about inflation, the cost of servicing debt, and the currency’s short-term stability.
Why the Peso Is Freefalling
Higher-than-expected US inflation figures for September has made it more likely the Federal Reserve will keep interest rates high, or even raise them again, at its October 27-28 meeting. This situation has put investors in a bind, propelling USD/PHP higher.
Investment decision making is straightforward in such an ecosystem. For instance, if fund managers have to choose between a Philippine bond and a US Treasury bond offering similar returns with less risk, they’ll likely pick the US Treasury. This choice pulls capital out of the Philippine’s emerging market economy.
The Philippines also imports a lot of oil, so its trade deficit grows whenever global crude oil prices increase. The peso has lost ₱5.21 since the US-Israeli conflict against Iran began on February 28. The constant need for dollars to pay for essential fuel and commodity imports continues to weigh on the peso.
Is a Breather Coming?
Despite its ongoing structural challenges , the peso could stabilize soon due to several factors. The Bangko Sentral ng Pilipinas (BSP) is taking a cautious stance, prioritizing foreign exchange reserve conservation. It usually steps in only when the currency moves sharply and chaotically.
RCBC economist Michael Ricafort says market intervention is likely around 63.10 to 63.15. This suggests authorities may be allowing the currency to weaken somewhat.
Deutsche Bank has also noted that further interest rate hikes are probable . Should the BSP’s Monetary Board raise rates by 25 basis points on October 22, for example, it could support the peso by closing the yield gap with the US.
Meanwhile. remittances from Overseas Filipino Workers (OFW) typically increase in the fourth quarter as the holidays near, injecting substantial dollar liquidity into the local banking system. Lower oil prices would also benefit the peso by reducing import costs, particularly if Middle East tensions ease.
Could USD/PHP Reach 65.00 Before Year-End?
Forecasting models currently suggest the USD/PHP pair will trade between 63 and 65 by December. Some financial institutions believe it could test 64 or even higher if market pressures persist. One projection places the December average around 64.16, possibly reaching nearly 65.44 if current trends continue.
Other financial institutions have previously suggested the rate might hit 66 if the dollar strengthens considerably.
For the 65.00 level to hold, existing pressures like higher US interest rates, steep oil prices , and steady dollar demand would have to intensify, without sufficient domestic policy support or seasonal dollar inflows to counteract them.
What factors are primarily responsible for the peso’s recent record low against the US dollar?
High global oil prices, a strong US dollar, growing import trade deficits, and shrinking interest rate differences all pushed the peso to its recent record low, past key resistance levels.
Can seasonal factors provide short-term peso support?
Yes, overseas Filipino worker remittances and exporter dollar conversions usually increase in the fourth quarter. This often gives temporary structural support to the peso.
How might the BSP respond at its next meeting?
The Monetary Board might raise the policy rate by 25 basis points when it meets on October 22. This would be to tackle inflation risks and help steady the currency, all without committing to defend a specific exchange rate.
The post Peso Slides to Record Lows: How Soon Can USD/PHP Reach 65.00? appeared first in UK on InvestingCube .
