Quick Read
- The BSP raised its policy rate 50 basis points to 5.5% on October 22, and the weak peso still closed at a record ₱63.52 that day.
- The BSP repeated that it does not use monetary policy to support the peso, so the hike targets inflation and not the exchange rate.
- Raw materials, capital equipment and fuel make up more than 85% of imports, according to government data cited by manufacturers.
- Electronics were about 59% of exports and nearly 24% of imports in 2025, which narrows the group that gains from a weaker currency.
- The peso closed on October 22 above the ₱60 to ₱62 range that budget planners expect through 2030.
The BSP raised its policy rate 50 basis points to 5.5% on October 22, and the peso closed that day at a record ₱63.52 per dollar. The weak peso was not the target of the hike, and the central bank said so again. That leaves importers with two costs at once: more pesos for every dollar invoice, and more interest on the credit that pays for it.
The Hike Was Aimed at Prices, Not the Currency
The Monetary Board delivered its first 50-basis-point hike since February 2023, and the size caught the market off guard. Only two of 22 economists in a pre-meeting poll expected it. Twenty had penciled in a quarter point. It was the fourth straight meeting at which the BSP tightened, bringing the total to 125 basis points since April.
The board’s statement described the move as a strong response to broadening price pressures and upside risks to inflation, meant to contain second-round effects. Governor Eli Remolona Jr. said a strong majority backed the larger size because of concern that the BSP was falling behind the curve. He added that the board discussed an off-cycle hike and decided against it so the market would not read conditions as dire.
None of that concerns the exchange rate. Asked about the peso, Remolona repeated that the BSP does not use monetary policy decisions to support the currency. The weak peso kept sliding. It closed at ₱63.52, its third straight record low.
The rate cycle and the currency are now two separate problems. The BSP is fighting the first with 125 basis points. The second is left to the firms that buy dollars.
| Date | Level | Type | Source status |
|---|---|---|---|
| Dec 31, 2025 | ₱58.79 | Close | Secondary (BusinessWorld, via aggregator) |
| Mar 19, 2026 | ₱60.1 | Reported low | SunStar |
| May 14 | ₱61.64 | Record close | Gulf News |
| Aug 27 | ₱61.888 | Record close | Manila Bulletin |
| Oct 8 | ₱62.90 | Record close | GMA |
| Oct 15 | ₱63.06 | Record close, first above ₱63 | Tribune, Gulf News |
| Oct 21 | ₱63.361 | Record close | Manila Bulletin |
| Oct 22 | ₱63.52 | Record close, hours after the hike | Secondary (aggregator citing GMA) |
Importers Pay Twice for the Weak Peso
Government import data cited by the Federation of Philippine Industries (FPI) show that more than 85% of imports are inputs businesses need to operate. Raw materials and intermediate goods make up 38.2%, capital equipment 27.9% and mineral fuels 19.4%. A factory cannot pause raw materials or fuel because they became costlier, and each dollar needed for components, machinery and fuel now takes more pesos to settle.
Take a $100,000 invoice. At the BSP’s January 13 reference rate of ₱59.250, it cost ₱5,925,000. At the ₱63.52 close on October 22, it costs ₱6,352,000, which is ₱427,000 more for the same shipment. One figure is a reference rate and the other a closing rate, so the gap is indicative, but the direction is clear. An importer’s own bank also sits apart from the benchmark. In that same bulletin, the BSP’s telegraphic transfer selling rate was ₱59.500, 25 centavos above the reference rate.
The second cost is credit. A hike reprices credit already on the books, not only new loans, so an importer financing purchases on a variable-rate line pays more on the same balance as the benchmark rises. An importer with no locked-in exchange rate and a floating-rate loan pays on both sides of the same purchase.
FPI chairperson Elizabeth Lee said in August that rate hikes do nothing to what imported crude, fertilizer and raw materials cost in dollars. The October 22 decision played that out. It raised the price of credit and left the dollar cost untouched.
Exporters Gain Only as Far as Their Inputs Are Local
The usual counterweight is that a weak peso helps exporters. It does, for firms that earn in dollars and pay most of their costs in pesos. Reports on manufacturers in August drew the same line, saying exporters may gain but firms that depend on imported inputs face a tougher calculation.
The country’s largest export sector sits on both sides of the currency. In 2025, electronics made up 58.81% of Philippine exports and 23.92% of commodity imports, according to the Semiconductor and Electronics Industries in the Philippines Foundation. Its figures put electronics exports at $49.64 billion and imports at $31.94 billion that year. Not every imported electronic good goes into an export, but the import side is large enough that the gain from a weaker peso is smaller than the export total suggests.
Capital equipment is the other pressure point. Machinery and equipment account for 27.9% of imports, and buying them now costs more pesos while financing them costs more interest. A firm can defer the purchase or pay both prices. Either way, the weak peso and the policy rate land on the same budget line.
Credit Will Not Get Cheaper Soon
The currency still feeds the rate cycle. A weak peso raises the cost of imported fuel and goods, which feeds the inflation the BSP is fighting, and Oxford Economics said the peso’s record low in October strengthens the case for more tightening. The firms hit by the exchange rate are therefore also hit by the hikes it helps trigger.
Forecasters differ on size but not direction. Oxford Economics expects another 25-basis-point hike in December and a hold through 2027. Citi said the BSP could end its cycle after a second straight 50-basis-point hike in December if the peso’s decline accelerates. Oxford also noted that gross international reserves fell 8.8% year on year in September to their lowest level in three years, so the cushion behind any defense of the currency is thinner than it was.
The Government’s Own Peso Range Has Already Broken
The Development Budget Coordination Committee expects the peso to hold between ₱60 and ₱62 against the dollar until 2030. The peso closed at ₱63.52 on October 22, which is ₱1.52 above the top of that range. An import budget set at ₱62 per dollar now runs about 2.5% short.
The central bank took the inflation problem and left the weak peso with the firms that settle dollar invoices. Importers carry the risk the BSP declined to take, and what gives first is their margin or their price list.
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