It is the lowest on record.
On Friday, August 28, the Philippine peso slumped to its historic low of PHP62.265 against the US dollar.
In the intraday teading, the peso opened with a weak performance, as it started at PHP62.05 and reached as low as PHP62.27, before closing at the said mark above.
Prior to this, on Thursday, the Philippine peso closed at PHP61.888, making Friday’s closing 37.7 centavos lower.
This showing of the peso comes as Federal Reserves Chairman Kevin Warsh is expected to give his speech at the Jackson Hole Economic Policy Symposium, where he is expected to express interest in adjustments of interest rates.
BSP INTEREST RATE
Meanwhile, on Thursday, August 28, the Monetary Board decided to raise the Bangko Sentral ng Pilipinas (BSP) Target Reverse Repurchase (RRP) Rate by 25 basis points to 5.0 percent.
This move adjusts the interest rates on the overnight deposit and lending facilities to 4.5 percent and 5.5 percent, respectively.
“Headline inflation has eased, although oil prices remain volatile. The possible impact of severe El Niño conditions on agricultural prices pose further upside risks to inflation,” shared the BSP.
It added, “Potential wage adjustments also warrant close monitoring, including their implications for broader price setting and second-round effects. These underlying price risks require preemptive monetary action.“
The central bank also noted that the policy action will see average headline inflation to breach the 4.0-percent tolerance ceiling in 2026 and 2027, while latest estimates of core inflation also indicate broadening price pressures.
“Nonetheless, headline inflation is expected to decline and settle close to the 3.0-percent target by 2028,” the BSP further noted.
The Bangko Sentral also said, “The measured increases in the policy rate will continue to anchor inflation expectations and mitigate the risk of further second-round effects.“
In spite of slow growth in the first half of 2026, the BSP told that the fundamentals for growth appear to be “intact over the medium term,” and with the support of fiscal measures, they project growth to strengthen in the second half of the year.
Looking ahead, the Monetary Board said that it is also prepared to take monetary policy action as warranted to ensure that inflation returns to the 3.0-percent target, in keeping with its price stability mandate.
AUGUST INFLATION RATE
Projections from the central bank also see the August 2026 inflation in the country to settle within the range of 5.5 to 6.5 percent.
“Upward price pressures for the month are likely to be driven by higher rice, vegetable, fruit, and fish prices, partly due to unfavorable weather conditions, and elevated domestic fuel costs,” it elaborated.
However, the BSP also divulged that these upward pressures are expected to be mitigated by lower prices of meat, as well as lower electricity rates and the peso appreciation.
