125 Pesos (Jose Rizal) – Philippines

The currency situation in the Philippines in 2022 was defined by significant depreciation and volatility, driven primarily by aggressive monetary tightening in the United States and global economic headwinds. The Philippine Peso (PHP) fell to a historic low, breaching the ₱59-to-the-US dollar mark in October, a level not seen since the currency was freely floated in the 1980s. This sharp decline was largely a reaction to the US Federal Reserve's interest rate hikes, which strengthened the US Dollar globally and triggered capital outflows from emerging markets like the Philippines as investors sought higher returns in safer dollar-denominated assets.

Domestically, the Bangko Sentral ng Pilipinas (BSP) faced a challenging policy dilemma, caught between defending the peso and supporting economic recovery. To curb inflation—which soared to a 14-year high due to rising food and energy prices—and to manage exchange rate pressures, the BSP embarked on its own tightening cycle, raising key policy rates by a total of 350 basis points over the year. However, the BSP's actions lagged behind the Fed, maintaining a significant interest rate differential that continued to put downward pressure on the peso. The nation's widening trade deficit, fueled by elevated global commodity prices and robust demand for imports as the economy reopened, further exacerbated the currency's weakness.

By year-end, the peso had recovered slightly from its lowest point, closing near ₱55 to the dollar, aided by a moderation in the dollar's global strength and the cumulative impact of the BSP's rate hikes. Nevertheless, the currency's performance in 2o22 highlighted the Philippine economy's vulnerability to external financial shocks and the complexities of managing monetary policy in a post-pandemic, inflationary world. The depreciation contributed to higher costs for imports and debt servicing, presenting ongoing challenges for inflation management and economic planning heading into 2023.