MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is expected to aggressively intervene in the foreign exchange market to prevent the Philippine peso from breaching the psychological 60-to-the-dollar level.
According to a note from BMI Research published on Tuesday, February 10, 2026, while the outlook for the currency remains broadly bearish, the central bank has “sufficient ammunition” to combat excessive volatility and the resulting “imported inflation.”
Key Projections and Drivers
- Year-End Forecast: BMI, a Fitch Group unit, expects the peso to end 2026 at 59.50 against the US dollar.
- Bearish Pressures: The currency faces headwinds from weakening export growth, lower domestic interest rates, and elevated inflation compared to the United States.
- Interest Rate Outlook: BMI projects the BSP will cut its policy rate to 4 percent this year. This narrowing of yield differentials could dampen foreign capital inflows, especially if the US Federal Reserve remains relatively hawkish.
The Central Bank’s Defense The report highlights that the BSP is in a strong position to defend the peso if a disorderly slide occurs:
- Record Reserves: As of January 2026, the Philippines’ gross international reserves (GIR) stood at a 16-month high of $112.5 billion, well above global adequacy benchmarks.
- Governor’s Stance: BSP Governor Eli Remolona Jr. has indicated that a breach of 60 would not “automatically” trigger forceful intervention. Instead, the central bank’s response will depend on the speed and “disorderliness” of the currency’s movement.
Economic Trade-offs The volatility of the peso presents a double-edged sword for the Philippine economy:
- The Upside: A weaker peso increases the domestic value of remittances from Overseas Filipino Workers (OFWs) and makes local exports, particularly in the AI-linked electronics sector, more competitive.
- The Downside: Sustained depreciation risks driving up the cost of imported goods (fuel and food), reigniting inflation, and increasing the peso value of the country’s foreign debt.
Risks to the Outlook BMI flagged that risks remain weighted toward a weaker peso. Potential triggers for a further decline include a more hawkish-than-expected US Federal Reserve or a cooling of global demand for AI-linked technology, which could weaken the Philippines’ current account.
As the peso continues to hover near record lows—having touched an intraday low of 59.50 in late January—the BSP’s commitment to using its massive dollar reserves to maintain market stability will be a critical factor for the country’s macroeconomic health in 2026.