FX.co ★ Philippine Peso Tests Record Low

The Philippine peso has depreciated to 59.3 against the US dollar, marking a historic low, following signals from the Bangko Sentral ng Pilipinas (BSP) that a short-term interest rate cut might be forthcoming. BSP Governor Eli Remolona suggested that a rate cut in February is possible, though it remains uncertain. Despite an uptick in inflation during December, he reassured that inflation levels are still "reasonably low." He further noted that the country's economic growth this year is anticipated to fall below the government's target. Despite this, Remolona has previously stated that the policy rate is approaching its desired level, and any forthcoming cut could likely be the last one for the year. Nonetheless, bearish sentiment has intensified given the central bank's relatively relaxed stance on the peso's depreciation. Remolona emphasized that policymakers are more concerned about whether currency fluctuations could significantly influence inflation rather than the currency's specific levels. Additional pressure on the peso is rooted in a worsening current-account balance and eroding investor confidence amid a corruption scandal involving the government.