Political noise drags peso to new all-time low

THE PESO dropped to a new all-time low against the greenback on Thursday as political concerns at home and rising US Federal Reserve rate hike odds weighed on sentiment.

The currency sank by 26 centavos to close at P61.64 per dollar from P61.38 on Wednesday, according to Bankers Association of the Philippines data posted on its website.

This beat the previous record close of P61.567 on April 30.

Year to date, the peso has depreciated by 4.62% or P2.85 from its end-2025 finish of P58.79.

The currency opened Thursday’s session slightly stronger at P61.35 a dollar, which was also its intraday best. Meanwhile, its worst showing was at P61.66 against the greenback.

Dollars traded dropped to $1.58 billion from $1.8 billion in the previous session.

“The peso is no longer reacting to just a strong dollar and high US rates. Today’s move suggests markets are also pricing in a higher political and uncertainty premium, especially as the peso underperformed regional peers,” the first trader said in a Viber message.

The Philippine Senate president said on Thursday that the lawmaker wanted by the International Criminal Court, Ronald dela Rosa, was no longer in the Senate building, Reuters reported.

Mr. dela Rosa, the former national police chief and top enforcer of ex-President Rodrigo Duterte’s bloody “war on drugs,” had been under Senate protection and is wanted for crimes against humanity, the same charges Mr. Duterte is accused of.

Meanwhile, the House of Representatives earlier this week impeached Vice-President Sara Duterte-Carpio. The Senate is expected to convene as an impeachment court on May 18.

“The dollar-peso ended higher on peso weakness amid rising political tensions, alongside reinforced hawkish Fed bets after hotter-than-expected US producer price inflation data overnight,” a second trader said by phone.

“The peso reached record lows after the stronger than expected US producer inflation report  amplified views that the Federal Reserve might not be able to deliver rate cuts this year despite Kevin Warsh’s confirmation as the next US central bank chairman, replacing Jerome Powell,” a third trader said in an e-mail.

Christopher Wong, FX strategist at OCBC Group Research, said in a note that the peso continued to be pressured by weakening economic fundamentals due to elevated oil prices, citing the weaker than expected first quarter economic growth and faster than expected April inflation figures.

He added this “leaves the Bangko Sentral ng Pilipinas (BSP) facing an uncomfortable inflation-growth trade-off.”

“Political noise may also be adding a layer of caution at a time when oil, rates and risk-off dynamics are already unfavorable,” Mr. Wong said.

For Friday, the second trader said the peso could test the P61.75 mark, which is the lowest level it has touched so far, adding that trading could be driven by the outcome of the meeting between US President Donald J. Trump and China President Xi Jinping and scheduled US data releases, including initial jobless claims and retail sales data.

The third trader said the peso could move between P61.50 and P61.75 against the dollar on Friday due to a likely weaker US retail sales report overnight.

The first trader said the peso could test the P62 level in the near term if volatility persists and if risk sentiment deteriorates further, but added that the BSP still has enough credibility and reserves to prevent disorderly swings. — Aaron Michael C. Sy