Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. cautioned that while the central bank can intervene to curb the domestic currency’s rapid slide, it lacks sufficient foreign exchange reserves to indefinitely hold the peso at or below ₱60 per US dollar.
Speaking at a Senate Committee on Finance hearing, Remolona addressed the local currency’s fall to historic lows, telling lawmakers that the BSP’s market intervention capabilities are inherently constrained.
“Pwedeng pigilin para bumagal pero hindi kayang i-fix, hindi kayang ₱60. Hindi kaya yun,” Remolona noted.
“Mauubusan tayo ng reserves. Mauubusan tayo ng dollars,” he explained.
The remarks came in response to inquiry from Senator Erwin Tulfo regarding whether the peso—then trading around ₱61.72—could recover to sub-₱60 levels or face further depreciation.
The local unit subsequently closed Thursday’s session at a new record low of ₱61.888 against the dollar, surpassing its previous trough of ₱61.847 recorded on July 24. The currency weakened further on Friday, dropping 37.7 centavos to settle at ₱62.265—marking its first close beyond the ₱62 handle. Since late February, when it stood at ₱57.554, the peso has depreciated by roughly 7.6%.
Remolona emphasized that the monetary authority does not target a specific exchange rate. Instead, the central bank intervenes to smooth out sharp, volatile swings that risk fueling inflation and destabilizing the broader economy.
A weakening currency inflates the cost of key imports, including fuel, food, fertilizer, and industrial materials.
“Totoo po na pag imported yung goods, pag humina ang peso, tataas ang presyo ng imports na iyon,” he acknowledged.
He pointed out that the degree of inflationary impact depends heavily on the pace of the decline, as abrupt depreciations inflict greater economic stress than gradual adjustments.
“The exchange rate itself is something very hard to fix for a country like the Philippines,” Remolona said.
The governor identified the country’s persistent trade deficit—currently hovering around 13% of gross domestic product (GDP)—as a core driver of currency weakness, given that heavy import dependency creates continuous demand for greenbacks.
“Masyadong mahal ang exports natin. Kulang na kulang ang exports natin, so mahirap yatang pigilin yung pagbaba ng peso,” he noted.
The peso’s slide has persisted despite ongoing monetary tightening. The Monetary Board raised its benchmark interest rate by 25 basis points to 5%, bringing total rate hikes since April to 75 basis points.
Meanwhile, inflation remained above the target range of 2% to 4% in July, even as headline inflation moderated to 6.2% from 6.4% in June, and core inflation slowed to 4.2% from 4.4%.
Remolona maintained that long-term currency stability relies on expanding foreign exchange inflows rather than relying on central bank interventions.
He highlighted initiatives like Pax Silica and the Luzon Economic Corridor as structural pathways to boost export output and attract foreign investments.
“Gumawa tayong paraan para palakasin ang exports,” Remolona stated.
“Pero sana, lumakas ang exports natin. Kulang na kulang ang exports natin,” he added. “Yun ang ating challenge dito sa exchange rate.”