Peso Hits Record Low Amid Inflation Fears; Gov't Vows Action

The Philippine peso has hit a record low against the US dollar, fueling concerns about inflation. The local currency depreciated to P62.565 to a dollar on Wednesday, surpassing its previous record low of P62.40 last Tuesday. This marks the fourth consecutive day of depreciation against the greenback. Malacañang said President Marcos and his economic managers are addressing the impact of a weaker peso on the prices of goods. "Managing inflation and foreign exchange is the primary mandate of the BSP (Bangko Sentral ng Pilipinas). On the national government’s part, the President has been working closely with the economic team to manage the inflationary effects of higher foreign exchange, including on food, business, logistics and other prices," said a Palace press officer. The weakening of the peso is seen to increase the prices of imported goods, which could raise consumer prices. The office of Executive Secretary Ralph Recto said government efforts started immediately following the start of the Middle East conflict, citing the UPLIFT program, which involved reprioritizing spending, reducing non-essential expenditures, and directing resources toward sectors affected by rising prices. "The main thrust of the economic team is to support economic growth, and one way we are doing this is by increasing productive public spending." The administration’s approach is focused on fiscal discipline and more efficient use of public funds, meaning careful review of spending proposals and prioritization of programs with high economic and social returns. Attributing the weakening of the peso to "brewed US dollar strength and rising global prices of oil," the office said the BSP’s rate hike last week was done to anchor inflation expectations as it also helps support the local currency. "Moving forward, we expect the BSP to act decisively based on available data and intervene when necessary to reduce exchange rate volatility," the executive secretary’s office said. The Philippine economy relies heavily on remittances from overseas workers, and a weaker peso could diminish the real value of these transfers. Furthermore, industries dependent on imported raw materials and rising fuel costs increasing transportation expenses will broadly impact various sectors. The government is also exploring measures to boost domestic production and stabilize supply chains to address these challenges.