Peso drops as inflation data bolster BSP easing hopes
THE PESO weakened anew against the dollar on Tuesday on expectations that the Bangko Sentral ng Pilipinas (BSP) would cut rates again as early as this month after headline inflation hit a near six-year low in July.
The local unit closed at P57.63 per dollar, dropping by 34 centavos from its P57.29 finish on Monday, Bankers Association of the Philippines data showed.
The peso opened the session lower at P57.40 against the dollar. Its worst showing was at P57.69, while its intraday best was at P57.26 against the greenback.
Dollars exchanged jumped to $2.11 billion on Monday from $1.69 billion on Friday.
“The peso depreciated after Philippine headline inflation for July 2025 at 0.9% fueled expectations of an August policy rate cut from the BSP,” a trader said in an e-mail.
The consumer price index (CPI) rose 0.9% year on year in July, slower than the 1.4% in June and 4.4% clip a year ago. It was also within the BSP’s 0.5% to 1.3% forecast for the month.
The July CPI print was below the 1.2% median estimate in a BusinessWorld poll of 17 analysts conducted last week. This also marked the fifth straight month that the CPI settled below the central bank’s 2-4% target range.
“On balance, a more accommodative monetary policy stance remains warranted. Emerging risks to inflation from rising geopolitical tensions and external policy uncertainty will require closer monitoring, alongside the continued assessment of the impact of prior monetary policy adjustments,” the BSP said in a statement.
BSP Governor Eli M. Remolona, Jr. has said that a rate cut is “on the table” at the Monetary Board’s Aug. 28 policy meeting, which would mark the central bank’s third straight easing move this year.
This would mark the central bank’s third straight easing move this year following the rate cut in June that brought the policy rate to 5.25%.
Since starting its easing cycle in August 2024, the central bank has lowered interest rates by a cumulative 125 bps.
The peso weakened on Tuesday as the dollar also rebounded following days of decline as US jobs data revived bets of a September rate cut by the Federal Reserve, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
For Wednesday, the trader said the peso could continue to decline ahead of a potentially upbeat US services purchasing managers index report.
The trader sees the peso moving between P57.50 and P57.75 per dollar on Wednesday, while Mr. Ricafort expects it to range from P57.50 to P57.80. — Aaron Michael C. Sy
