USD\/PHP rose 0.3% to 60.10 after President Ferdinand Marcos Jr. declared a national state of emergency in response to rising energy prices. The Philippine peso is down 2.1% against the US dollar so far in 2026.<\/p>\n
The emergency order expands executive powers to secure fuel supplies and speed up measures aimed at limiting higher energy costs for consumers and businesses. A national emergency was last declared in 2020 during the COVID-19 pandemic.<\/p>\n
The order is set to last one year unless the President extends or suspends it. A committee will be formed to directly procure energy commodities, food, medicine, and other necessities.<\/p>\n
The Department of Energy has been instructed to tighten oversight of energy prices and target profiteering. The Department of Transport will subsidise fuel and commuter fares, suspend aviation taxes, and extend public transport operating hours.<\/p>\n
The government has also temporarily introduced a four-day work week to reduce energy use. Authorities indicated less likelihood of using foreign exchange reserves to defend the peso, after describing such action as \u201cfutile\u201d.<\/p>\n
The recent declaration of a state of emergency signals a major policy shift for the Philippine Peso. With authorities now viewing the defence of the currency as “futile,” the primary support for the peso has been removed. We should anticipate that the path of least resistance for USD\/PHP is upward in the coming weeks.<\/p>\n
This shift comes as the nation\u2019s gross international reserves have already been under pressure, dipping to around $98 billion last month from over $100 billion at the end of 2025. The new emergency powers, which include subsidies and direct commodity procurement, will likely widen the government’s budget deficit beyond the initially projected 5.5% of GDP. This added fiscal strain creates a fundamental headwind for the currency.<\/p>\n
Given the reduced risk of central bank intervention, we should consider buying USD call options against the PHP. This strategy allows us to position for further peso weakness with a defined risk, targeting a potential move above the 60.50 level. The current environment makes long USD positions more straightforward than they were just a week ago.<\/p>\n
Looking back to the state of emergency declared in 2020, we saw a similar, sharp increase in currency volatility. We expect implied volatility on USD\/PHP options to climb as the market digests the full impact of these new measures. This presents an opportunity not just for directional bets, but also for strategies that benefit from rising market uncertainty.<\/p>\n
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