Peso Could Weaken to ₱60:$1 Amid Trump Policies, Says IBON Foundation

The Philippine peso is projected to weaken further, possibly breaching the ₱60:$1 threshold, as the country grapples with a widening trade deficit and declining remittances due to tighter US immigration policies under President Donald Trump, according to the IBON Foundation.

IBON Foundation executive director Sonny Africa explained that the peso faces more pressure to depreciate than to strengthen, citing various economic factors.

Peso Under Pressure

“It’s tricky to forecast, but the factors driving the peso towards ₱60 (to a dollar) are there,” Africa said during a press briefing in Quezon City.

The peso is currently trading at the ₱58:$1 level, closing at ₱58.51:$1 on Wednesday, January 22. Its record low of ₱59:$1 was last seen on December 19, 2024.

Africa pointed to the country’s growing trade deficit as a persistent factor weighing down the peso. Recent data from the Philippine Statistics Authority (PSA) shows the balance of trade in goods posted a $4.767-billion deficit in November 2024.

Remittances at Risk

Declining remittances are also a concern, especially as Trump’s immigration crackdown looms. The Bangko Sentral ng Pilipinas (BSP) reported cash remittances from overseas Filipinos dropped to a six-month low of $2.808 billion in November 2024, down from $3.079 billion in October.

The US accounts for 40.9% of total remittances, making Filipino migrants there critical to the country’s foreign exchange reserves. Africa warned that deportations of undocumented Filipino workers could significantly reduce these inflows.

“Without doubt, the biggest source of remittances is the US. If undocumented Filipinos are sent back, those remittances disappear,” he noted.

Broader Implications

Trump has pledged to implement the largest deportation effort in US history, targeting millions of undocumented immigrants. The Philippine Department of Migrant Workers (DMW) estimates around 370,000 undocumented Filipinos in the US.

Africa added that tighter immigration policies could extend to legal migrants, creating a “slippery slope” that may further limit remittance inflows.

Central Bank Stance

BSP Governor Eli Remolona Jr. emphasized that the central bank allows the market to dictate the exchange rate but is closely monitoring its inflationary impact.

“At some point, if the peso keeps depreciating, it begins to affect inflation. For now, the effect has been modest,” Remolona said in December when the peso hit its record low.

Outlook

With weakening remittances, a growing trade deficit, and the potential for stricter US immigration policies, the peso may face increasing challenges. Economic analysts will closely monitor developments as the Philippines navigates these headwinds.