Malacañang: Strong US dollar, global tensions behind peso slump

The Philippine peso’s recent slide to a record low against the US dollar can be attributed to an “unusually strong” US currency and to the geopolitical tensions in the Middle East, Malacañang explained.

During a Palace briefing on Thursday, April 30, Palace Press Officer and Communications Undersecretary Claire Castro said the peso’s depreciation was driven by external pressures affecting emerging markets, including the Philippines.

Citing Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio Balisacan, Castro said the movement of the exchange rate reflects stronger demand for the US dollar compared to available supply and that "the peso depreciation reflects the rise of the demand for dollars faster than the supply of dollars.”

Balisacan explained that multiple external factors are influencing the currency’s weakness.

"Depreciation results from overlapping factors mainly external to the Philippine economy. There are two major ones; one is the unusually strong US dollar which is pulling capital toward US assets and away from emerging markets like the Philippines. This makes the peso weaker simply because the dollar is rising faster," he said in a statement read by Castro.

He also pointed to global oil price increases and the country’s reliance on imports as additional pressures on the local currency. "This causes the country’s demand for dollars to spike, the trade and current account deficits to rise and in turn, the peso to weaken," Balisacan further stated.

On measures to address the situation, Balisacan said currency stability remains within the mandate of the Bangko Sentral ng Pilipinas (BSP), which has tools to manage volatility. "Its ammunition is sufficient to prevent excessive volatility," he said.

The peso hit a new record low of ₱61.485 against the US dollar on April 30.