Peso Slide Puts Focus on Philippines’ Food and Energy Dependence

MANILA — Economists are urging the Philippines to strengthen domestic food and energy production after the peso fell to a record low, warning that prolonged currency weakness could drive up the cost of fuel, food and other essentials.

The peso closed at ₱63.95 against the US dollar on Monday, October 26, its fourth consecutive trading day at a fresh record low, BusinessMirror reported, citing Bankers Association of the Philippines data. It weakened from ₱63.615 on Friday.

The decline has sharpened concerns about the country's reliance on imports and the limits of higher interest rates in shielding the currency from external pressures. Economists interviewed by BusinessMirror said stronger domestic production and targeted support for vulnerable households should form part of the response.

Higher import costs threaten household budgets

Ser Percival K. Peña-Reyes, an economist at Ateneo de Manila University, told BusinessMirror that a weaker peso increases the cost of imported fuel, food, fertiliser and other essential goods. Those increases can spread to transport fares, electricity bills and retail prices, particularly if depreciation persists.

He called for targeted assistance to vulnerable households, fiscal discipline and investment in domestic food and energy production to reduce dependence on imports.

Peña-Reyes said the speed of the peso's decline was concerning, but the more important question was whether depreciation became sustained and disorderly. Currency weakness can also increase the burden of debt denominated in foreign currencies, he said.

₱65 a risk, not a certainty

Peña-Reyes and Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., said the peso could approach ₱65 to the dollar if geopolitical and market pressures worsened. The figure is a scenario, not a confirmed exchange rate or an inevitable outcome.

Peña-Reyes identified a persistently strong dollar, further oil-price increases, accelerating capital outflows and worsening geopolitical tensions as potential triggers. Lower oil prices, improved global conditions and stronger foreign-exchange inflows could instead help stabilise the currency, he said.

Ravelas urged attention to domestic weaknesses in food security, transport and electricity, alongside conservation of energy, water and food.

Interest rates cannot offset every pressure

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, attributed the peso's weakness to growing demand for dollars, elevated oil prices, global uncertainty and pressure from the widening balance-of-payments deficit.

He told BusinessMirror that continued depreciation despite tighter Bangko Sentral ng Pilipinas policy suggested external pressures were outweighing the support provided by higher interest rates. Monetary tightening could help stabilise expectations and moderate the decline, but could not fully counter those forces, he said.

For households and businesses, the central risk is not a particular exchange-rate threshold but the cumulative effect of sustained peso weakness on prices, Rivera said.