Philip Wee at DBS Group Research has raised his USD/PHP year-end 2026 forecast to 62.7 from 57.8, reflecting persistent external and domestic pressures. The closure of the Strait of Hormuz and higher Oil prices have widened trade deficits and pushed inflation well above target. Bangko Sentral ng Pilipinas (BSP) has reversed earlier easing but is reluctant to repeat the large hikes of 2022 amid weaker growth.

Peso outlook darkens with external shocks

"We have revised our USD/PHP forecasts, now projecting it to end 2026 around 62.7, up from our previous estimate of 57.8."

"USD/PHP first traded above 60 one month after Operation Epic Fury led to the Strait of Hormuz’s closure, triggering higher energy prices and supply disruption."

"Given its heavy reliance on imported oil from the Gulf, the Philippine economy was hit by the return to record trade deficits and a surge in inflation."

"CPI inflation surged to 7.2% YoY (2.6% MoM) in April from 4.1% YoY (1.4% MoM) in March, forcing the BSP to reverse February 19’s 25 bps rate cut into a 25-bps hike to 4.50% on April 23."

"BSP sees this Friday’s inflation rising to 7.1-7.9% in May, further above its 2-4% target range."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)