Peso at record low as Marcos vows "hard" defense; Meralco flags rate hit

The Philippine peso has fallen to a record low against the US dollar, prompting President Ferdinand Marcos Jr. to vow the government will defend the currency "as hard as we possibly can," even as the country's largest power distributor warns the weakness will push electricity rates higher.

The peso breached the P64-per-dollar level for the first time on Tuesday, closing at a record low of P64.17 against the US dollar, according to Meralco's financial briefing. Bloomberg reported the currency fell to a record low of 64.20 per dollar on Tuesday. The local currency recovered by 14.5 centavos on Wednesday, closing at P64.025 against the dollar, Meralco said.

President Marcos Jr. told reporters on Wednesday that authorities would do all they can to ensure the peso does not keep falling against the US dollar. "People can take solace in the fact that our policy towards the peso is to continue to defend the peso as hard as we possibly can," he said, according to Reuters. Marcos said the government has "all the means to defend" the currency, adding "there was no reason to panic over its weakness. Our foreign exchange reserves are healthy. And that's what we draw on to defend the peso."

Marcos met with central bank and key government officials on Tuesday, a day before his remarks, Bloomberg reported. He also said "don't panic. It is an effect of rising prices of oil and consequently the rising prices of fuel, and its effect on the economy."

The peso has lost more than 8 percent against the US dollar in the year to date, Reuters reported. Philippine foreign reserves fell to US$99.5 billion in September, the lowest level since September 2023, according to Reuters.

The central bank governor last week said it intervened in the foreign exchange market to smooth out sharp fluctuations, Reuters reported. The central bank raised its key policy rate by a larger-than-expected 50 basis points last week to combat inflation, which it said could be fuelled by a weaker peso through higher imports. Marcos said monetary measures could only do so much to control inflation, and added that "we have to do others," Reuters reported.

**Meralco sees rate impact**

Manila Electric Co. (Meralco) expects the weakening peso to push electricity rates higher as foreign exchange movements affect the cost of power purchased from generation companies. "Definitely, it will have an impact especially on the pass-through generation costs. More than 50% of our power sources are dependent on forex (foreign exchange) and that will probably increase the generation rates," Meralco Senior Vice-President and Head of Regulatory Management Jose Ronald V. Valles said during the company's financial briefing on Wednesday.

"We are finding ways to manage and offset the increases brought about by the forex depreciation," Valles said.

Meralco's warning comes after the company raised its residential electricity rate in October due to higher generation charges. The overall rate increased by P0.3191 per kilowatt-hour (kWh) to P15.0615 from P14.7424 per kWh in September. The generation charge, which accounts for the largest portion of a typical customer's electricity bill, rose by approximately 50 centavos per kWh.

In its nine-month financial report, Meralco said the average retail electricity rate increased by 15% to P13.43 per kWh from P11.63 per kWh a year earlier, largely due to higher pass-through charges. Generation charges accounted for 65% of the average retail rate, with increases attributed to higher fuel prices, power supply costs, wholesale electricity market charges, and peso depreciation. Meralco's purchased power costs rose by 20% to P338.7 billion from P281.6 billion in the same period last year.

Meralco PowerGen Corp. (MGEN), the company's power generation arm, said further peso depreciation could affect its pipeline projects. "[For] projects that have broken ground, it will have no impact but for projects that have yet to start, [we] need to look out for," MGEN President and Chief Executive Officer Emmanuel V. Rubio said during the briefing.

Despite uncertainties involving foreign exchange rates and fuel costs, Meralco maintained its consolidated core net income guidance of P56.6 billion for 2026. "While global uncertainties continue to put pressure on fuel supply and prices, Meralco's diversified portfolio continues to give us greater strength and flexibility to navigate the challenges," Meralco Chairman and Chief Executive Officer Manuel V. Pangilinan said.

For the third quarter, Meralco's consolidated core net income rose by 26% to P18.32 billion from P14.49 billion in the same period last year. For the nine months ended September, consolidated core net income increased by 12% to P44.83 billion from P40.02 billion a year earlier. Revenue grew by 19% to P443.04 billion from P371.77 billion in the comparable period in 2025.

At the local bourse, Meralco shares fell P11.80, or 2.67%, to close at P429.80 apiece on Wednesday.

**Commentary: 'collapse' and fiscal strain**

In a separate opinion column, The Philippine Star's Alex Magno described the peso's fall as a "collapse," writing that "depreciation seems too kind a word." Magno noted that the current worst-case scenario anticipates the $1:P70 level being breached soon, and argued the falling peso and rising inflation stem from "economic mismanagement" rather than "geopolitical factors," a phrase he called a "cover-up phrase."

Magno also wrote that the country is "on the verge of doubling our national debt" within one administration, and that the 2027 national budget faces cost overruns, with the road program alone facing cost overruns as graders, pavers, rollers and dump trucks all run on diesel. Asphalt, used on most roads, is a petroleum-derived product, he noted. Magno wrote that Congress has just two months to avert reenactment of the previous budget, and that the rapid erosion of the peso and high inflation threaten to make the proposed 2027 budget "academic."