The Philippine peso has fallen 6.2% this year, making it Asia's worst-performing currency as an oil shock erodes dollar reserves. Unlike regional peers with manufacturing or commodity exports, the Philippines relies on service industries, widening its trade deficit by nearly a third to $37 billion in the first seven months. Foreign reserves have dropped 9% to $103 billion from a February record high.

President Ferdinand Marcos Jr. and Bangko Sentral ng Pilipinas Governor Eli Remolona say defending the peso by drawing down reserves is futile. JPMorgan Chase & Co. and Bank of America strategists predict the currency could reach 65 per dollar by mid-2024, after hitting a record low of 62.77. Domini Velasquez, chief economist at China Banking Corp., cites structural balance-of-payments deficits and risk-off sentiment.

Former BSP deputy governor Diwa Guinigundo warns Remolona's candor encourages speculation. Contrastingly, India ($700 billion reserves) and Indonesia ($145 billion) mounted aggressive defenses. Finance Secretary Frederick Go says authorities intervene only to smooth volatility. The economy grew just 2.3% in Q2 versus India's 7.8% and Indonesia's 5.3%, with August inflation at 6.1%, double the 3% target.