THE PESO plunged against the dollar on Monday to log its weakest close so far this year following signals of further easing from a Monetary Board member to help cushion the Philippine economy from the impact of a widening graft scandal on growth prospects.
The local unit closed at P58.90 versus the greenback, sinking by 27.5 centavos from its P58.625 finish on Friday, Bankers Association of the Philippines data showed, extending its slide to an eighth consecutive session.
This was an over 10-month low for the peso as this marked its worst close since it finished at its record low of P59 on Dec. 19, 2024.
The peso opened Monday’s session slightly stronger at P58.60 versus the dollar. It climbed to as high as P58.50, while its weakest showing was at P58.92 against the greenback.
Dollars exchanged rose to $1.6 billion on Monday from $1.39 billion on Friday.
The peso sank on Monday following dovish comments from Benjamin E. Diokno, who is a member of the Bangko Sentral ng Pilipinas’ (BSP) policy-setting Monetary Board, amid growth concerns, the first trader said in a Viber message
“The pair closed higher on a weaker peso due to former BSP Governor Diokno’s statement saying that he sees more easing this year, alongside dollar demand on stronger US-China trade deal expectations,” the second trader said in a phone interview.
“Local market sentiment is partly weighed by political noise in recent weeks as a potential distraction from the economy and reforms,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The Philippine central bank may cut its key interest rate again in December and further next year, as the economic fallout from a corruption scandal may linger through the end of 2026, an official said, Bloomberg reported.
“I would expect another 25-basis-point cut” at the next meeting in December, Mr. Diokno said in an interview with Bloomberg Television’s Avril Hong on Monday.
Further rate cuts are possible “maybe sometime next year,” as policymakers assess economic growth and employment data, with inflation under control, according to Mr. Diokno.
The BSP reduced its benchmark interest rate by a quarter point this month as a corruption scandal in the government’s flood control projects has threatened the country’s economic outlook. Its next rate-setting meeting is scheduled for Dec. 11.
Mr. Diokno, who once helmed the central bank as well as the finance and budget departments, said the economy may “slow down a bit” due to the corruption controversy and trade uncertainties. He said 2026 will be “a transition period” as President Ferdinand R. Marcos, Jr. fixes the problem.
In July, Mr. Marcos exposed corruption in flood-control projects worth billions of pesos. Many of the projects were either substandard or nonexistent, leading to investigations that have implicated key public works officials and several lawmakers, who have denied wrongdoing. The allegations fueled a broad exit by foreign investors in the stock market.
“We will probably be able to recover from this mess by the end of next year. And 2027 and 2028, we’ll be back on track,” Mr. Diokno said.
For Tuesday, the first trader said the peso could rebound on profit taking and before an expected rate cut by the US Federal Reserve.
Both the first trader and Mr. Ricafort see the peso moving between P58.75 and P59 per dollar on Tuesday, while the second trader expects it to range from P58.60 to P58.90. — A.M.C. Sy with Bloomberg
