Peso slides despite BPO dollar inflows, BSP says
MANILA, PHILIPPINES — The Philippine peso closed at a record low of 62.27 per United States dollar on August 29, 2026, falling 7.6% over six months as the Bangko Sentral ng Pilipinas raised its benchmark interest rate to 5.0% for the third consecutive time, with Governor Eli Remolona Jr. acknowledging that outsourcing and overseas remittance inflows have not closed the country’s structural current account deficit.
Remolona made the remarks at a Senate hearing, citing low domestic savings rates as a contributing factor to the peso’s sustained decline alongside the broader current account shortfall.
BSP raises rate to 5% as peso falls to 62 for first time
According to a report from Bilyonaryo, the Bangko Sentral ng Pilipinas has raised its benchmark rate by a cumulative 75 basis points since April 2026, reaching 5.0% in a series of three consecutive 25-basis-point increases as the central bank attempts to moderate peso depreciation and contain imported inflation.
The Philippines’ gross international reserves fell to an 18-month low of US$103.317 billion as of July 2026, constraining the central bank’s capacity to defend the peso through direct market intervention.
The peso’s move through the 62-per-dollar level on August 29, from 57.554 on February 27, represents a 7.6% depreciation in six months, a pace that has persisted despite business process outsourcing (BPO) sector revenues and overseas Filipino worker remittances continuing to generate dollar inflows into the Philippine economy.
“We have been running a current account deficit for several years,” said Eli Remolona Jr., governor of the Bangko Sentral ng Pilipinas.
Current account deficit persists as spending outpaces BPO and remittance inflows
Remolona said the outsourcing sector’s dollar earnings and overseas remittances contribute meaningfully to the Philippines’ foreign exchange position, but that the current account deficit reflects investment outpacing national savings at a structural level that the inflows alone cannot resolve.
The central bank’s approach to the peso depreciation has been to resist defending a specific level rather than depleting reserves, with Remolona publicly ruling out fixing the peso at any particular target rate given current reserve levels.
For a country where BPO revenues and OFW remittances collectively represent two of the largest foreign currency inflows, a sustained current account deficit signals that domestic consumption and investment are absorbing dollar earnings faster than the export and services economy generates them — a structural dynamic that monetary policy tightening can moderate but not eliminate.
Remolona pointed to the domestic savings rate as a medium-term variable: if savings rise, the current account deficit narrows, reducing the pressure on the peso and the central bank’s need to intervene or tighten rates further.
For outsourcing operators and international clients with Philippine delivery centers, a weaker peso reduces the local-currency cost of dollar-denominated payroll, effectively lowering the peso cost of retaining Philippines-based staff relative to earlier exchange rate assumptions.
For Philippine BPO workers and their families, the same depreciation reduces the purchasing power of any peso savings while increasing the value of foreign currency remittances received from abroad.
Related news
- Philippine IT-BPM targets $42Bn in revenue, 1.97Mn jobs for 2026 · 24 Jun
- BPO, OFW remittances drive Philippines’ $110.9Bn foreign reserves · 14 Jan
Disclosure: Outsource Accelerator uses AI tools in the backend of its editorial workflow. Every article is reviewed and verified by a human editor before publication.
Stay ahead of the outsourcing industry. Join thousands of business leaders who rely on Outsource Accelerator for the news, trends, and expert insights that matter. Subscribe to our free newsletter and never miss an update.
