Peso seen hovering around 59:$1 in 2025

The peso is expected to weaken further in 2025, with analysts predicting the exchange rate to hover around 59 per dollar by midyear.

- By KEISHA TA-ASAN

This outlook is driven by a mix of global uncertainties, including US economic policy under the anticipated Trump administration and persistent geopolitical tensions.

Reinielle Matt Erece, an economist from Oikonomia Advisory & Research Inc., said one of the major concerns for the foreign exchange is the impact of protectionist policies potentially pursued by the US government once President Donald Trump is formally inaugurated into office.

"If Trump's administration pushes through with his protectionist policies, additional tariffs will cause higher inflation expectations for the US. This can push the US Federal Reserve to refrain from cutting rates too much. A relatively high-interest rate setup means a stronger dollar," he told The STAR.

Erece also cited the destabilizing effects of geopolitical tensions.

"If wars and tensions are persistent, global supply chains and trade are at risk. This can lead to more expensive imports, leading to higher foreign currency demand to buy those imports, which leads to further peso depreciation," he said.

"With these risks ahead, 2025 may be a year where we see the peso further depreciate. We expect the exchange rate to hover around 59 pesos per dollar by mid-2025," he added.

During the last policy meeting of the Bangko Sentral ng Pilipinas (BSP) on Dec. 19, the peso sank to an all-time low of 59 to $1 anew.

This was the third time the peso hit its historic low this year, following its 59 close on Nov. 21 and 26. It has yet to breach this record, which was first set in October 2022.

According to Erece, if the BSP sees inflation continuing its downtrend, they might try to help boost economic growth through further rate cuts next year.

"If we lower interest rates further next year while the Fed slows down in their monetary easing path, then the dollar may further strengthen against the peso," he said.