The Market Monitor Minding the Nation's Business
Malacañang has underscored that the Bangko Sentral ng Pilipinas (BSP) remains the key institution responsible for managing peso stability, as the local currency continues to weaken against the US dollar and hit record-low levels.
Palace Press Officer Claire Castro said the government views the peso’s depreciation as largely driven by external pressures rather than domestic economic weaknesses.
She pointed to two main global factors: the sustained strength of the US dollar and rising international oil prices.
“There are two major ones. One is the unusually strong US dollar, which is pulling capital toward US assets and away from emerging markets like the Philippines. This makes the peso weaker-simply because the dollar is rising faster,” she said, citing Arsenio Balisacan of the Department of Economy, Planning, and Development.
“The other main factor is the sharp global oil price spikes, combined with the country’s dependence on imports. This causes the country’s demand for dollars to spike, the trade and current account deficits to rise, and, in turn, the peso to weaken,” she added.
Castro said President Ferdinand Marcos Jr. and the administration share this assessment, stressing that current currency movements reflect global economic conditions, including geopolitical tensions.
She explained that the peso’s decline is primarily due to a widening gap between dollar demand and supply—driven by import payments, debt servicing, and other foreign currency needs, against inflows from exports, remittances, and investments.
In this context, Castro emphasized that the Bangko Sentral ng Pilipinas has both the mandate and tools to address volatility in the foreign exchange market.
“It is the BSP, our central bank, that has the institutional mandate to stabilize the peso and prevent excessive volatility. Its ammunition is sufficient to prevent excessive volatility,” she said.
She cited the BSP’s policy instruments, including foreign exchange reserves, interest rate adjustments, macroprudential measures, and market signaling, as key tools to manage currency fluctuations and maintain stability.