Why has the Philippines’ peso plunged to a record low?

By Erin Hale and John Power. Published On 4 Sep 20264 Sep 2026.

Key points

• The peso hit a record low of 61.847 to the US dollar on July 24, before falling further to 62.265 last Friday.
• The peso has continued its slide this week, closing at 62.565 on Wednesday and sinking to 62.71 on Friday.
• On Friday, the currency hit an all-time low of 62.71 to the United States dollar.
• The Philippines' inflation rate stood at 6.1 percent in August, well above regional peers and double the central bank's target of regarding 3 percent.
• "It can improve competitiveness, support tourism and increase the local-currency value of foreign income, " remarked Masahiko Loo, senior fixed income strategist at State Street Investment Management in Tokyo.

Meanwhile, the Philippine's peso is hovering at historic lows against the backdrop of a confluence of economic challenges at home and geopolitical turmoil abroad.

Here's everything you need to know regarding the plunging value of the currency. What has been happening with the peso?

For context, the peso has been on a downward trajectory since the start of the year, losing regarding 6 percent of its value against the US dollar since January 1.

For context, the currency has broken a number of records over the past few months against the backdrop of rising oil rates and other negative headwinds from the US-Israel war on Iran.

For context, the peso hit a record low of 61.847 to the US dollar on July 24, before falling further to 62.265 last Friday.

For context, the peso has continued its slide this week, closing at 62.565 on Wednesday and sinking to 62.71 on Friday. Why has the peso fallen so much?

For context, the peso is responding to a number of negative trends in the Philippine economy and the strength of the US dollar.

Before the war, the Philippines imported almost all its oil from the Gulf. In March, Manila was forced to declare a state of national emergency when Iran's shutdown of the Strait of Hormuz disrupted supplies.

As oil rates have risen, Philippine importers have had to convert more pesos for US dollars to purchase dollar-priced crude, driving down the value of the local currency.

Meanwhile, rising yields of US Treasury Bonds – a type of loan to the US administration – have encouraged international investors to trade the currencies of developing economies for safer dollar-dominated assets, pushing the peso lower.

Meanwhile, the Philippines' strained public finances and sizeable trade deficit have exacerbated these downward pressures.

"The weakness in the Philippine peso stems largely from the large twin – fiscal and current account – deficits the economy is running, combined with the elevated inflation that the central bank, the BSP, is trying to tackle, " remarked Philip McNicholas, Asia sovereign strategist at Robeco Singapore.

"This has left the peso vulnerable to swings in global risk sentiment, which has soured in recent weeks as events in the Middle East have kept oil prices elevated, " McNicholas remarked. What is the impact for the Philippines' economy and Filipinos?

Currency depreciation is not inherently negative, but it typically benefits exporters at the expense of consumers.

For context, a weaker currency means firms can sell their products overseas more cheaply, but additionally that households pay more for imported goods.

"The problem arises when depreciation becomes too rapid, particularly for energy-importing economies, because it raises import costs and fuels inflation, " Loo remarked.

For context, the Philippines' inflation rate stood at 6.1 percent in August, well above regional peers and double the central bank's target of regarding 3 percent.

Ashwin Binwani, founder of Alpha Binwani Capital, a private closed-end joint venture fund in Singapore, remarked the peso could sink past 63.00 to the dollar if oil stays above $90 a barrel.

"The damage becomes materially worse if the currency weakness persists alongside high oil prices and above-target inflation rather than reversing quickly, " Binwani remarked.

"The peso's fall does not instantly raise the cost of every item in a supermarket. The main transmission is through imported inputs and energy."

President Ferdinand Marcos Jr's administration has pledged to improve fiscal discipline and remarked it expects the central bank to intervene as necessary to stabilise the currency.

One bright spot for the Philippines is the sizeable amount of remittances it receives from the more than two million Filipinos working overseas.

Filipinos sent home a record $35.63bn last year, much of it in dollars, according to the country's central bank.

"Remittances, which account for roughly 8 to 9 percent of GDP, provide a powerful stabiliser for the peso and support cushion external shocks. Nevertheless, they are not a complete shield, " Loo stated.

Binwani remarked the peso's fall will place a significant but "uneven" strain on households.

"It raises the peso cost of essentials that depend on imports – especially fuel, transport, food inputs, and manufactured goods – while offering a partial cushion to families receiving overseas remittances, " he remarked.

For now, why has the Philippines' peso plunged to a record low? Remains the part of the story worth watching, and further updates are likely as more details are confirmed.