Will the Peso Breach 60 to $1? Risks and Implications in 2025
The Philippine peso faces a critical test in 2025 as heightened volatility raises the possibility of breaching the 60 to $1 threshold. With global markets watching closely, experts warn that Trump’s protectionist policies and external economic factors could push the peso to historic lows despite active interventions by the Bangko Sentral ng Pilipinas (BSP).
In recent years, the Philippine peso has faced increasing pressure from global economic dynamics, including US Federal Reserve policies and domestic challenges like twin deficits. The currency’s recent performance reflects these external forces, with the BSP stepping in to stabilize rates. However, the specter of aggressive trade policies under President Trump looms large, potentially exacerbating peso depreciation.
Peso at Risk of Breaching 60 to $1:
According to BMI, the peso is likely to trade between 55.20 and 59.20 this year. However, if Trump’s aggressive protectionist measures take markets by surprise, a breach of the critical 60 to $1 level remains a real possibility.
Impact of Trump’s Policies:
Trump’s proposed blanket tariffs of 10–20% on imports are seen as a key driver of peso volatility. The US dollar has already strengthened as the Federal Reserve adopts a more hawkish stance, and fewer rate cuts are expected in 2025.BSP’s Interventions:
The BSP has actively intervened to stabilize the peso, with foreign reserves dropping 1.5% in December 2024 to $106.84 billion. Despite these efforts, external pressures and market speculation may outpace the central bank’s capabilities.The Role of Domestic Fundamentals:
Beyond global factors, the peso’s long-term weakness is linked to the Philippines’ twin deficits. BMI notes that wide fiscal and current account deficits continue to limit the currency’s upward potential.Interest Rate Cuts and Economic Growth:
With the economy needing support, the BSP is expected to deliver 75 basis points in rate cuts this year. While this easing could stimulate growth, it may also add downward pressure on the peso.
The peso’s depreciatory trend underscores the importance of balancing monetary policy with external market pressures. For businesses, remittances, and trade, a weaker peso could mean higher costs, while the BSP’s interventions may provide only short-term relief. The upcoming months will reveal whether Trump’s policies amplify these challenges or if the peso stabilizes within expected ranges.
As the Philippine peso faces uncertainty in 2025, global and domestic factors will play a critical role in determining its trajectory. From Trump’s trade policies to BSP’s interventions, businesses and investors must stay informed to navigate this volatile landscape effectively.
What’s your view on the peso’s future? Could aggressive global policies push it past the 60 to $1 mark, or will the BSP’s measures hold the line? Share your thoughts below.
