Peso gains as inflation fears wane

THE PESO edged up on Tuesday as lower global oil prices and June Philippine consumer price index data supported expectations of easing inflationary pressures.

The currency rose by 5.6 centavos to close at P61.435 per dollar from P61.491 on Monday, according to data on the Bankers Association of the Philippines’ website.

The local unit opened Tuesday’s session stronger at P61.40 versus the greenback. It moved within a narrow range as it reached a high of P61.39, while its weakest showing was at just P61.455.

Dollars traded increased to $1.377 billion from $876.75 million previously.

“The US dollar-peso exchange rate corrected slightly… after better-than-expected local headline inflation for the second straight month at 6.4% in June 2026 (versus 6.8% in May 2026 and 7.2% in April 2026),” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

He added that the sharp decline in global crude oil prices recently with the latest ceasefire between the United States and Iran continuing to hold, which has led to rollbacks in local pump prices, also supported the peso.

“Slower inflation tends to improve the peso’s purchasing power than otherwise,” he said.

“It is worth noting that the peso exchange rate was relatively stable versus the US dollar recently amid possible intervention at the P61.60-P61.70 levels recently [and] possible future BSP (Bangko Sentral ng Pilipinas) rate hikes, especially in the next rate-setting meeting on Aug. 27, to help stabilize the peso exchange rate, importation costs, and, in turn, also better manage inflation and inflation expectations.”

Philippine headline inflation slowed to 6.4% in June from 6.8% in May but was faster than the 1.4% pace logged in the same month last year, the government reported on Tuesday.

This was below the 6.6% median estimate in a BusinessWorld poll of 18 analysts and was the second straight month of deceleration. This was also the slowest since March’s 4.1% pace.

However, this marked the fourth month in a row that inflation breached the Bangko Sentral ng Pilipinas’ (BSP) 2%-4% tolerance band.

For the first semester, the consumer price index averaged 4.8%, also above the BSP’s goal.

BSP Governor Eli M. Remolona, Jr. said on Monday that the economy can handle one more 25-basis-point (bp) rate hike as they expect growth to rebound in the coming months.

The Monetary Board has raised benchmark borrowing costs by a total of 50 bps since April to curb spiraling prices and keep inflation expectations anchored amid the global oil shock caused by the Middle East conflict.

For Wednesday, Mr. Ricafort said the peso could trade at P61.35 to P61.55 against the dollar. — Bettina V. Roc