PESO SEEN TO HIT P62 : $1 THIS YEAR

Sinking Peso always tied to social unrest

On Mar 4, 2025

A squatters' colony in Manila. The deteriorating Peso-Dollar exchange rate has always victimized the marginalized sectors the most as prices of goods and services continue to rise. A Bank of America projection said the Peso would hit P62 to the Dollar this year, the lowest in the country's history-- and a recipe for social unrest (photo credit to Alamy).

THE Bank of America (BofA) Global Research warned the Philippine Peso could further sink to P62 against the US Dollar—and stay on this range till the end of year, further aggravating the country’s worsening financial situation, with the country’s trade deficit surging to $5.09 billion at the start of 2025 and its balance of payment (BOP) position swinging to a deficit of $4.08 billion.

According to a March 4 report by the BusinessWorld written by Luisa Maria Jacinta C. Jocson and quoting BofA Global Research, the Peso is forecasted to hit P61 to the US Dollar by end of this month (first quarter) before further sinking down to P62 from the second and third quarter of the year (April to September). The Peso is then expected to recover to P61 against the Dollar by the last quarter (October to December) — and stay at this range until the end of the year.

The worsening of the exchange range is expected to bite hard into the finances of ordinary Filipinos as this is also expected to increase the inflation rate— and along with it the cost of basic goods– due to hikes in fuel prices as the country pays more for its oil imports.

The worsening of the exchange rate would also come at a time when the school year is about to open, thus affecting the education of millions of students due to higher school fees and education materials.

Lower Peso is a political issue, tied to social unrest

The country’s political history showed that disgruntled social elements have always used the weakening of the Peso to agitate against the government—and for outside political forces to intervene in the country’s domestic affairs and economic and financial policies.

Thousands of Filipinos rallying during the impeachment trial of President Joseph Estrada in Manila, December 7, 2000. The weakening of the Peso against the Dollar has always been among the issues raised by malcontents against the government since the end of martial law in 1981 (photo credit to AP Photo/Itsuo Inouye)

During the martial law period from 1972 to 1981, the Peso proved steady and its decline controlled, with the exchange rate ranging at P6.43:$ in 1972 to P7.51:$ by 1981, when President Marcos Senior officially lifted martial law.

However, the assassination of former senator Benigno ‘Ninoy’ Aquino Jr. in 1983 immediately sunk the Peso to P11.11:$ before further sinking down to P16.69:$ in 1985, mainly to the impact of the Asian financial crisis that year..

That year, when President Marcos was forced by the United States to call for a ‘snap election,’ with Aquino’s widow, Corazon, as his opponent, the sinking peso driving high inflation and high prices of goods, was among the issues used by his opponents to foment disgruntlement against his presidency.

In 1986, when President Marcos was illegally forced to step down, the Peso stood at P20.28:$.

The scenario was again repeated under President Joseph Estrada where the weakening Peso was among the issues raised against him.

When Estrada became President in 1998, the Peso stood at P40.89:$. When he was also illegally removed in 2000, the exchange rate stood at P44.19:$

More turbulent times ahead; PH debt up by 9.8 percent

Data from the Bangko Sentral ng Pilipinas (BSP), indicate the country’s economy is not performing very well. The $5.09 billion trade in goods deficit or the difference between the values of the country’s exports and imports increased by over $1 billion the past two years under the Marcos administration or from $4.14-billion in deficit in December 2024 and $4.36 billion deficit in 2023.

Meanwhile, the BOP of $4.1 billion very early in the year is another warning of the country’s precarious financial position. The BOP is a method used by monetary authorities to monitor all international monetary transactions covering a specific period.

All trades conducted by both the public and private sectors are accounted for in the BOP to determine how much money is going in and out of a country.

BSP data and mainstream media reports disclosed that the BOP deficit is a big jump from the $740 million deficit compared to January 2024 but almost three times more than the BOP deficit of $1.5 billion only last December.

In terms of debt, the latest data from the Bureau of the Treasury (BtR) placed the country’s national debt at P16.05 trillion by end of 2024, up by 9.8 percent from the P14.62 trillion national debt in 2023.

On the other hand, BSP data disclosed that the country’s external debt as of end of the third quarter in 2024 stood at $139.64, or over 30 percent of the country’s GDP.

From January to November 2024, external debt service also increased by 14 percent, to P15.735 billion.