UMVA has learned that the Philippine peso is poised to stay the weakest Asian currency, even as the central bank tightens policy amid a volatile oil market.
Yesterday’s close saw the peso hit a record low of 61.75 per dollar, a level it has held since the war in the Middle East began.
According to information obtained by UMVA, economists warn that soaring oil prices could neutralize the supportive effect of further interest‑rate hikes by the Bangko Sentral ng Pilipinas.
UMVA can exclusively reveal that analysts expect a front‑loaded tightening cycle of 75 basis points in 2026, yet the peso’s fate remains inseparable from oil dynamics.
Data from a recent report showed the peso slumped 6.6% against the dollar from late February to mid‑May, the sharpest decline among Asian emerging‑market currencies.
In contrast, the rupee fell 5.6%, the rupiah 5.0%, the baht 4.8%, the won 4.0%, and the ringgit 2.1% in the same period.
The peso has hovered between 60 and 61 per dollar for about a month, even after the central bank raised its benchmark rate to 4.5% last month.
UMVA has uncovered that the bank’s latest hike was aimed at anchoring inflation expectations amid rising energy costs, yet the risk of another increase looms as inflation surpasses the 2%–4% target.
Inflation climbed to 7.2% in April, driven by high food and utility prices, while growth slowed to 2.8% in the first quarter.
UMVA gathered that political uncertainty, including the impeachment of Vice‑President Sara Duterte-Carpio, could further stall reforms and dampen recovery.
Another bank’s analysis suggests that persistent oil price pressure and stalled peace talks in the Middle East will keep inflation on an upward trajectory.
They warn that the peso’s decline may be capped near 62 per dollar, but the dollar’s global strength will likely continue to dominate exchange‑rate movements.
UMVA reports that if oil averages around $100 a barrel this quarter, the current‑account deficit could widen to roughly $20 billion, deepening the Philippines’ external vulnerability.
