Peso ‘caught in perfect storm’ vs US dollar, drops 3.5% vs May average

Manila: The Philippine peso slid to ₱57.58 per US dollar on Tuesday (June 24) marking a drop of approximately 3.5% from the ₱55.625 average in May, according to BSP data — highlighting mounting pressure on the currency amid geopolitical uncertainty. 

The peso’s slide is the result of what analysts call a “perfect storm” – global risk sentiment boosting the dollar, soaring oil prices weighing on import-dependent economies, and dovish BSP policy reducing the peso’s yield appeal. 

What this means to overseas Filipino workers

The slide of the Philippine peso represents a  ₱1,955 gain for OFWs and their families in terms of peso value received for every $1,000 remitted, or a 3.5% increase — mirroring the peso’s depreciation over the same period.

Economists point to a number of key factors driving this weakness, including geopolitical turmoil, the oil shock and Bangko Sentral ng Pillipinas (BSP) policy rate easing.

Escalating conflict in the Middle East — especially between the US, Iran, and Israel — has triggered a surge in global oil prices.

For the Philippines, a major oil importer, this spells higher energy import bills and inflation pressures, hurting the peso. Bankers Association of the Philippines noted oil-price volatility is a key driver of peso swings.

Oil prices have slid Tuesday due following the announcement of a Israel-Iran ceasefire on Tuesday, but it would take a few days for lower prices to reflect at local fuel pumps. 

The Bangko Sentral ng Pilipinas (BSP) recently implemented its second straight 25-basis-points (bps) cut in policy rate, lowering the reverse repo rate to 5.25%. 

Governor Eli Remolona signalled potential further easing in August or October, as per Manila Bulletin. 

This softening of domestic interest rates widens the yield gap with the US, making peso-denominated assets less attractive and lifting foreign capital flows out of the peso.

Globally, the US dollar has surged, underpinned by risk aversion amid geopolitical turmoil and a resilient US Federal Reserve stance.

The peso has mirrored this trend, falling in consecutive sessions — dropping to ₱57.45 on June 19, the lowest in 12 weeks. 

Economists pointed to a pronounced “flight-to-quality” toward the dollar.

Senior PIDS fellow John Paulo Rivera told Manila-based Business World that an escalation of the Middle East conflict or sharp oil spikes could reinforce pressure on the peso, possibly sustaining the ₱57 threshold.

Sarah Tan (Moody’s Analytics) highlights that, while BSP still has room to cut rates, geopolitical volatility might delay further easing 

What to watch

US dollar trends: A stronger dollar, fueled by safe-haven demand, will likely sustain pressure on emerging-market currencies, including the peso.

BSP actions: While easing may boost domestic growth, further rate cuts could deepen currency weakness. The central bank signalled possible future intervention if depreciation threatens inflation.