Philippine Peso Faces Stormy Seas: Bearish Bets Hit Year-Long Peak

Updated: November 01, 2025 00:05

Image Source: Nikkei Asia

Bearish bets against the Philippine peso have surged to their highest level since November 2024, driven by signals of central bank tolerance for depreciation, economic growth concerns, and political risks. This bearish sentiment contrasts with some cautiously optimistic Asian currency outlooks as global market tensions ease.

The Philippine peso has drawn increased bearish bets, hitting their highest level since late November 2024 by October 30, according to a Reuters poll. This bearish positioning comes amid ongoing market challenges and signals from the Bangko Sentral ng Pilipinas (BSP) that suggest a degree of tolerance for further peso depreciation.

Key factors driving the peso's bearish sentiment include the BSP’s emphasis on market-led exchange rate movements with interventions mainly aimed at smoothing inflation-induced volatility rather than preventing currency declines. The central bank’s unexpected rate cut earlier in October and hints of more cuts ahead are also dampening peso prospects, as lower interest rates typically reduce foreign investment inflows that support the currency.

Economic and political uncertainties are adding pressure. The Philippines' economic growth projections were trimmed, and investment sentiment has been clouded by corruption allegations involving major infrastructure projects, including flood control systems, which underperformed during recent typhoons. Protests and clashes add another layer of risk affecting market confidence.

Despite the peso weakening to record lows—reaching nearly 59 per US dollar in late October—the central bank maintains a cautious approach by intervening only to prevent excessive short-term swings. Seasonal factors such as year-end remittances typically strengthen the currency toward December, possibly moderating losses.

In a broader Asian currency context, while bearish bets on the peso have peaked, other regional currencies like the Malaysian ringgit and Chinese yuan are seeing more optimistic outlooks amid easing U.S. dollar strength and hopes for improved trade relations between the U.S. and China.

Key Highlights:

Bearish bets on the Philippine peso reached their highest since November 2024.
Bangko Sentral ng Pilipinas signals tolerance for peso weakness; interventions focus on volatility smoothing.
Surprise rate cut in October and prospects of further cuts weigh on currency strength.
Corruption probes and protests undermine economic growth outlook and investor confidence.
Peso weakened to an all-time low near PHP 59 per USD in late October, but seasonal remittance inflows expected to support the peso by year-end.
Contrasting sentiment in Asian FX markets as some currencies benefit from softer U.S. dollar and easing geopolitical tensions.

Sources: Reuters, Trading Economics, Bloomberg, Yahoo Finance

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