Peso Recovers But Remains at 19-Month Low

The Philippine peso showed signs of recovery against the US dollar on Friday, yet it remains within a 19-month low range. The recent uptick follows the announcement of a cut in rice import tariffs, which may pave the way for potential monetary easing.

The peso appreciated by 9.1 centavos, closing at P58.52:$1 from P58.611:$1 on Thursday.

According to Rizal Commercial Banking Corp. Chief Economist Michael Ricafort, the peso’s slight correction of 0.2% is noteworthy, but it still lingers at its lowest point since November 7, 2022, when the exchange rate was P58.58:$1.

Ricafort highlighted that the reduction in rice import tariffs from 35% to 15% could lower rice prices, subsequently easing overall inflation and potentially supporting local policy rate cuts in the near future.

“Going forward, the performance of the US dollar/peso exchange rate would partly be a function of intervention/defense as consistently seen over the past 1.5 years,” Ricafort said.

Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. has previously stated that the central bank intervenes in the foreign exchange market when the peso is “under stress” or when there are signs of “dysfunction in the market.”