The Philippine peso appears poised for a rebound in the coming months, as analysts anticipate central bank intervention and seasonal remittance inflows to support one of Asia’s weakest-performing currencies.
The peso weakened 3.2% in the September quarter, pressured by foreign stock outflows and deteriorating sentiment amid US tariff measures and domestic corruption allegations. Analysts, however, say the outlook is showing signs of improvement.
MUFG Bank Ltd. expects the peso to strengthen to 56.50 per US dollar by end-March 2026, implying a gain of roughly 3% from Tuesday’s close. Rizal Commercial Banking Corp. forecasts it to trade between 56.50 and 57.50 by end-2025, citing indications from the Bangko Sentral ng Pilipinas (BSP) that it may support the currency. Analysts also pointed to a likely softer US dollar as a supporting factor.
BSP Governor Eli Remolona said the central bank would intervene more forcefully during periods of extended peso weakness to curb inflation. With higher fuel costs weighing on the import-dependent economy, most economists surveyed by Bloomberg expect the BSP to hold interest rates at its meeting on Thursday.
“The central bank’s support for the peso would also help manage inflation better,” said Michael Ricafort, chief economist at Rizal Commercial Banking in Manila. “A stable peso would help stabilise import costs.”
Beyond monetary policy, the potential inclusion of Philippine government bonds in JPMorgan Chase & Co.’s emerging-market bond index could boost demand for local assets. Analysts also highlighted seasonal remittances as a key factor, noting that overseas Filipinos typically send more money home in the fourth quarter for the Christmas and New Year holidays. The Philippines received about US$9 billion in remittances in the last quarter of 2024, the highest for any quarter that year.
Despite lingering risks from graft allegations and a global trade slowdown linked to US tariffs, analysts remain optimistic. “We reckon this underperformance may be overstretched for now and should reverse course,” said Christopher Wong, currency strategist at Oversea-Chinese Banking Corp Ltd.
Bloomberg
