‘BSP won’t defend specific peso level’

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January 25, 2026 | 12:00am

MANILA, Philippines — The Bangko Sentral ng Pilipinas will not automatically defend any specific exchange rate level, and the peso may be allowed to weaken toward the 60-level against the dollar, provided the move occurs in an orderly manner, according to BSP Governor Eli Remolona Jr.

On the sidelines of the 2026 Annual Reception for the Banking Community, Remolona told reporters that the peso was already nearing the 60 to $1 level in recent weeks.

Asked about comments from the Palace that President Marcos did not want the peso to reach the 60 to $1 level, Remolona said the BSP would stick to its long-standing approach in managing the currency.

“We do what we’ve always done. We try to avoid sharp movements in the peso,” he said, adding that central bank intervention will depend on the circumstances.

Asked directly if the BSP would allow the peso to reach 60 if market movement is not sharp, he replied: “Yes, probably. It depends on a number of things.”

The peso has been trading between the 59 and 60 level against the dollar in recent sessions, weighed down by a stronger greenback, cautious global risk sentiment and lingering uncertainty over the timing of interest rate cuts by major central banks.

The local currency closed at 59.09 versus the dollar on Friday, appreciating by seven centavos from its 59.16 close on Thursday. The peso has strengthened since it hit a record low of 59.46 to a dollar on Jan. 15.

Remolona reiterated that the BSP does not target a specific exchange rate level and focuses instead on preventing excessive volatility. “Just because it’s 60 doesn’t mean we’ll defend it,” he said.

Asked if the 60 to $1 level is inevitable, Remolona said: “Not soon.”

The BSP chief also addressed questions on monetary policy, saying even the possibility of one more rate cut under the current easing cycle remains uncertain.

“Even that cut is still a maybe. We’re not yet sure. We will look at the usual factors,” he said.

He said the BSP is also keeping a close watch on US Federal Reserve policy, but stressed that it is “one data point among many” in the Philippine central bank’s decision-making.

Asked if weaker-than-expected economic growth in the fourth quarter of 2025 would justify a rate cut as early as February, Remolona said: “It would help us decide to cut. But it’s not the only factor.”

Remolona also rejected the idea of pre-committing to just one more rate cut. “It still depends on the data. We decide one meeting at a time,” he said.

The Monetary Board reduced the target reverse repurchase rate by 25 basis points to 4.50 percent at its December policy meeting. The BSP has so far reduced borrowing costs by 200 basis points since it began its easing cycle in August 2024.

Earlier in the evening, Remolona struck a more reflective tone as he addressed industry leaders during Banker’s Night, held at the Philippine International Convention Center.

Remolona said the theme for the evening was “innovation, inclusion, integrity,” outlining the BSP’s priorities across these areas.

On innovation, he said the central bank is working on areas like 24/7 settlement and cross-border instant payments. He added that there were also less visible efforts under way.

“There were also unseen innovations such as how we tweak and improve our economic models and sentiment measuring tools to better analyze the highly uncertain times we are in,” he said.

On inclusion, Remolona said the BSP is pushing initiatives such as retirement accounts and new policies aimed at helping those affected by disasters. He cited Circular 1221, which offers several key measures directly benefiting borrowers who were affected by calamities.

Meanwhile, the emphasis on integrity is particularly timely, especially in light of recent controversies surrounding public infrastructure and flood control projects, stressing that trust remains the foundation of a stable financial system.

“We at the BSP and you in the banking community, will ensure that a lack of trust does not weaken the financial system which is critical not just for economic growth but also for financial stability,” he said.

Remolona said the banking sector remains one of the brighter spots in the economy.

“The banks today are a bright spot in the economy. We’re inspired by what you do in your banks. For many decades, you kept depositors’ trust and they know they can go to you when they need a loan,” he added.