The Market Monitor Minding the Nation's Business
By DIEGO C. CAGAHASTIAN
When President Ferdinand R. Marcos Jr. met with Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. in Malacañang on Tuesday, the Palace spokeswoman tried to scrape the bottom of the economic cauldron to come up with something worth reporting to the press.
Undersecretary Claire Castro of the Presidential Communication Office had to make do with recycling Remolona’s earlier pronouncements that the Monetary Board, the policy-making body of the central bank, decided last December to reduce the key policy interest rate to 4.5 percent from 4.75 percent in October, 2025. This is old news, or dated information, and thus is not news.
The MB also lowered interest rates on overnight deposits from 4.25 percent to 4 percent, and on overnight lending facilities from 5.25 percent to 5 percent. This, too, is stale news.
In its latest monetary policy meeting, the BSP projected that economic growth would remain modest through the first semester of 2026 before a rebound in 2027 that is partly supported by earlier policy easing.
That the Monetary Board sees its current monetary policy easing cycle as nearing its end is already known, as Remolona had cited this several times last November and December. The next MB meeting is on February 19.
Castro also reported that President Marcos prays that the Philippine peso does not weaken to PHP 60 against the dollar since a sharper depreciation would raise costs across the economy and add pressure to government debts.
A weak peso would push up the cost of imports for the Philippines, which depends heavily on imported fuel, energy, pharmaceutical products, rice and other agricultural products, and even fish.
Higher import prices would boost inflation pressures and weigh on household spending.
Castro told reporters covering the Palace that the President remains in close coordination with the Bangko Sentral ng Pilipinas (BSP), though the central bank continues to see no need for immediate intervention in the foreign-exchange market.
“The BSP is more focused on preventing excessive volatility in the peso rather than targeting a specific exchange rate level,” she told a Palace news briefing in Filipino.
The peso hit a record low of P59.46 a dollar on Jan. 15 and has hovered around the P59 level since then, following the discovery of weak economic fundamentals.
With US President Donald Trump’s weird actuations in the international stage, several countries in Europe, Russia, Canada, France, Saudi Arabia, Brazil, Japan, China and other nations are ditching the US dollar. They are selling millions of dollars worth of US debt instruments. Thus the PH peso gained some lost ground this year, as investors pruned their exposure to US dollar-denominated assets such as US treasuries, bonds, and stocks.
Traders said the peso’s recovery reflected broader dollar weakness tied to geopolitical risks and uncertainty over the timing of US interest rate cuts.
Some market participants, however, cautioned that the peso could soften again ahead of key US economic data, which could revive demand for the dollar if figures point to a resilient US economy.
Malacañang expects economic growth to improve from the second quarter of this year and extend into 2026. Still, Castro said risks remain, particularly if investor and consumer confidence recovers more slowly than expected following the multibillion-peso graft scandal.
Meanwhile, the World Bank anticipates the country’s economic growth to recover over the next two years.
The World Bank projected a boost in private consumption if inflation stays low, employment remains strong, and monetary easing lowers interest rates which would encourage businesses and households to spend and invest more.
The World Bank also expected investment to strengthen as public infrastructure projects resume and recent liberalization reforms improve the business environment.
To ensure long-term and sustained growth, the World Bank said low-income and middle-income regions should continue to grow faster than Metro Manila.
According to the PCO, the BSP expects the economy to grow modestly in the first half of 2026, with a stronger rebound anticipated in 2027, supported in part by the recent monetary easing.
Meanwhile, the Philippines posted an improvement on its International Investment Position (IIP) as of end-September 2025 after net external liability declined to USD58.2 billion.
Data released by the Bangko Sentral ng Pilipinas (BSP) showed that the latest IIP of the Philippines is a 13.2 percent improvement from the USD67 billion at the end of the first half of this year.
“The lower net liability position reflects the expansion of external assets and decline in foreign obligations,” the BSP said in a report.
The report traced this positive development partly to the 1.9 percent rise of the country’s foreign asset investments to USD263.9 billion, as well as the 1.2 percent rise in foreign investments in Philippine assets to USD322.1 billion.
Of the total foreign investments of Philippine institutions during the first nine months this year, the bulk, at 43 percent, is accounted for by investments by the BSP, amounting to USD113.6 billion; followed by those of Other Sectors, 41.3 percent or USD109.1 billion; and banks at 15.6 percent or USD41.2 billion.
In terms of foreign investments in Philippine assets, 58.6 percent is accounted for by Other Sectors, amounting to USD188.9 billion; followed by those placed in debt securities issued by the general government, 27.9 percent or USD89.9 billion; banks, USD39.4 billion or 12.2 percent; and the BSP, 1.2 percent.
The BSP said IIP is “an important indicator of the country’s financial links with the rest of the world, helping to assess external vulnerability and resilience by showing what the country owns and owes internationally.”