Quick Read
- The peso rebound picked up on Nov 5, when the peso gained 56.5 centavos to close at ₱62.97 per dollar.
- Reports credited a weaker dollar and cheaper oil after Democrats won both chambers of the US Congress.
- Analysts tie the weaker dollar to expected gridlock in Washington, which could slow US spending and lower yields.
- Fuel importers pay fewer pesos per dollar, while exporters and remittance households receive fewer pesos for each dollar earned.
The peso rebound gained speed as the US midterm results came in. The peso closed at ₱62.97 on Nov 5, up 56.5 centavos in one session, after Democrats won control of Congress, the dollar slid and oil eased. That puts it ₱1.20 above the record low of ₱64.17 set on Oct 27.
The consensus read is simple. A divided Washington means a softer dollar, and cheaper crude lightens the import bill. Both helped the peso, though the record shows the peso rebound began before the vote.
The Peso Rebound Accelerated After the Democratic Win
The peso gained 56.5 centavos to ₱62.97 on Nov 5, according to published reports that credited cheaper oil and a weaker dollar. It was the strongest close since the Oct 27 record low and the largest one-day move in the window covered here. The record low itself came on a 22 centavo drop on Oct 27, and the Nov 3 close was 27 centavos above the Oct 30 close. The session followed a Nov 4 close of ₱63.535, when the peso slipped 6.5 centavos on expectations that October inflation would run faster than September’s 7.2 percent. The BSP had projected 7.1 to 8.1 percent for October, and the figure was due on Nov 5, the day the peso gained.
Markets moved first in the dollar. It hit a one-month low on Nov 4 as Democrats took control of both the House and the Senate. Spot gold rose 2.4 percent to $4,021.68 an ounce on Nov 4 as the dollar weakened. The peso followed a day later.
A Divided Congress Is Behind the Weaker Dollar
Analyst Kyle Rodda of Capital.com tied lower US yields to expectations that gridlock between the White House and Congress could slow US spending. Lower yields weaken the dollar, and a weaker dollar lifts the peso. The reaction was not one-directional. The same report noted fears that the sweep could disrupt the data-centre buildout behind the AI trade, and that global stocks slumped.
The dollar index was already easing before the vote. On Nov 2 it fell 0.22 percent to 101.76 after touching 101.42, its lowest since Sep 30, according to a market report that tied the move to a drop of about 7 percent in crude and to retreating Treasury yields. The election pushed the dollar further along a path that oil had started. That means two of the three drivers in play, the weaker dollar and cheaper oil, were already moving before the vote.
Cheaper Oil Eased the Pressure on the Peso
Oil matters to the peso because the Philippines pays for it in dollars. RCBC chief economist Michael Ricafort tied the Oct 27 record low to crude near a six-month high. He warned that higher oil prices raise the oil import bill and could widen the trade, current account and balance of payments deficits.
Crude then fell about 7 percent on Nov 2 on talks between Iranian and Qatari officials, and the December WTI contract, which had tested $105 the Friday before, traded below $100. Reports on the drop credited Iran diplomacy, not the election. Ricafort’s Oct 27 note did name concern about a US attack on Iran after the midterms as one of the pressures on the peso.
The Peso Rebound Started Before the Vote
The peso rebound did not wait for the results. President Marcos told the public not to panic and said the government was defending the peso as hard as it could. Ricafort said the peso was relieved by the president’s reassurance since Oct 28, and that OFW families converted dollars to pesos over the All Saints and All Souls holiday weekend to fund travel.
By the Nov 3 close, before US polls opened, the peso was at ₱63.47. That is 70 centavos above the record low, about 58 percent of the ₱1.20 recovery. The stretch from Nov 3 to Nov 5 added the remaining 50 centavos. Both legs are small against a peso that set 33 record lows this year.
| Date | Peso close per dollar | Driver cited in reports |
|---|---|---|
| Oct 27 | ₱64.17 | Crude near a six-month high, concern over US action on Iran |
| Oct 30 | ₱63.74 | None cited |
| Nov 3 | ₱63.47 | Marcos reassurance, holiday dollar conversions |
| Nov 4 | ₱63.535 | Expected faster October inflation |
| Nov 5 | ₱62.97 | Cheaper oil, weaker dollar |
The reports on the Nov 5 session credited oil and the dollar together and did not split the credit between them, so the election’s share of that last leg of the peso rebound is not stated.
Fuel Importers Gain While Dollar Earners Give Up Pesos
After the peso rebound, a dollar at ₱62.97 costs about 1.9 percent fewer pesos than at the record low. For companies paying for dollar-priced fuel and other imports, that is a smaller peso bill. The same move works the other way for exporters and for households that receive remittances, because each dollar they earn converts into 1.9 percent fewer pesos. Companies with dollar-denominated debt also pay fewer pesos for each dollar of interest and principal. Households that converted dollars at the Nov 3 close of ₱63.47 received about 0.8 percent more pesos per dollar than the Nov 5 close would give. These are effects of the exchange rate itself, not forecasts of where it goes next.
The recovery is also small beside the price pressure already in the system. Inflation was 7.2 percent in September, and the BSP projected 7.1 to 8.1 percent for October on higher fuel, electricity and transport fares.
The peso rebound reached ₱62.97 on a weaker dollar and cheaper crude, with the Democratic win supplying part of the dollar weakness. Fuel importers pay a smaller peso bill for it, and dollar earners take the lower conversion rate.
More developments that reshape the operating environment in National Signal section of Hemos PH.
