Market & Mainstreet
Peso Nears P62 as PSEi Sheds 106 Points, Fed Minutes Reveal a Deeper Hawkish Split, and UAE Cuts All Ties With Iran
The Daily Scan – August 20, 2026 (Thu)
The peso brushed a fresh intraday record of P61.995 before recovering to close at P61.815 on Wednesday, its lowest finish in over three weeks, dragging the PSEi down 106.36 points as class suspensions stretched into a third straight day across Metro Manila and 17 provinces. CPBRD warned inflation could re-breach 7 percent in the second half, while BSP kept its intervention posture unchanged ahead of its Aug. 27 policy meeting. Globally, the Fed’s July minutes showed hawkish sentiment ran deeper than the three known dissenters, the UAE cut all economic ties with Iran after accusing it of firing ballistic missiles at its territory, and BOJ September hike odds jumped to near 80 percent as Japanese bond yields keep climbing.
| Peso Close (Aug 19) | Fed Funds Rate | PSEi (Aug 19) |
| P61.815, weakest in 3+ weeks | 3.50%-3.75%, held 9-3 | 6,158.34, down 1.70% |
SECTION 1 · Philippines
● Peso brushes fresh record near P62, drags PSEi down 106 points as oil and geopolitics bite
WHAT HAPPENED
The peso opened Wednesday sharply weaker at P61.85 and touched an intraday record low of P61.995, before recovering slightly to close at P61.815, down three centavos from Tuesday and the currency’s weakest finish in more than three weeks. Dollar volume jumped 41.3 percent to $1.89 billion as the PSEi shed 106.36 points, or 1.70 percent, to close at 6,158.34, with Union Bank chief economist Ruben Carlo Asuncion attributing the move mainly to rising oil prices, geopolitical tension, and continued dollar strength.
UNCERTAIN
Reyes Tacandong senior adviser Jonathan Ravelas warned the peso could still breach P62 in the coming days, but a third trader told BusinessWorld the BSP would likely consider intervening only if that level is actually reached, and a breach is not yet seen as imminent ahead of the Aug. 27 policy meeting.
WHY IT MATTERS
A near-record peso paired with a sharp same-day equity selloff signals the Gulf-driven pressure has moved from currency markets into broader risk sentiment, adding urgency to the BSP’s rate decision just one week away and to the Fed minutes reaction covered in Section 2.
RISK
Businesses with dollar-denominated costs or near-term peso-to-dollar conversions should treat the P62 level as a live near-term threshold, not a distant one, given Wednesday’s intraday breach.
NEXT MOVE
Watch whether the peso’s daily close breaches P62 outright in the coming sessions, and track any signal from BSP Governor Eli Remolona ahead of the Aug. 27 Monetary Board meeting.
● Class suspensions stretch into a third straight day as habagat keeps 17 provinces under alternative learning
WHAT HAPPENED
Malacañang suspended face-to-face classes at all levels across Metro Manila and 17 provinces for Thursday, August 20, marking the third consecutive day of monsoon-driven disruption as the enhanced southwest monsoon, or habagat, continues to dump heavy rain over Luzon. The affected provinces include Abra, Benguet, Ilocos Norte, Ilocos Sur, La Union, Pangasinan, Bataan, Bulacan, Nueva Ecija, Pampanga, Tarlac, Zambales, Batangas, Cavite, Laguna, Rizal, and Occidental Mindoro, with government offices in those areas also directed to shift to alternative work arrangements.
UNCERTAIN
PAGASA has said rains are expected to persist over western Luzon through Friday due to two low-pressure areas drawing in the monsoon, but exactly when the pattern breaks, and whether a fourth or fifth day of disruption follows, isn’t yet confirmed.
WHY IT MATTERS
Three straight days of suspended classes and alternative work arrangements is a longer stretch than the single-day disruptions seen earlier this month, compounding lost productivity at the same time currency and inflation pressures are already squeezing households and businesses.
RISK
Businesses in Metro Manila and the 17 affected provinces should plan for continued attendance and logistics disruption through at least Friday, given PAGASA’s forecast that rains will persist.
NEXT MOVE
Watch PAGASA’s Friday advisory for whether the low-pressure areas exit the country’s area of responsibility or intensify further, and monitor whether the monsoon eases in time for the Aug. 21 Ninoy Aquino Day holiday weekend.
● Congressional think tank warns inflation could breach 7 percent again in the second half
WHAT HAPPENED
The Congressional Policy and Budget Research Department projected in a new budget brief that inflation could range from 6.37 to 7.32 percent in the third quarter and 5.91 to 7.31 percent in the fourth, keeping full-year inflation well above the BSP’s 2 to 4 percent target even under its lower-bound estimate of 5.5 to 6.1 percent for 2026. The think tank cited the renewed Middle East conflict, an imminent El Niño, extreme weather, peso depreciation, and wage adjustments as the main inflationary risks.
UNCERTAIN
Forecasts from other institutions vary widely, from the IMF’s 4.3 percent to the OECD’s 6.8 percent for full-year 2026, underscoring how much the outcome still depends on how the Gulf conflict and weather risks develop over the next several months.
WHY IT MATTERS
This reinforces Wednesday’s peso and PSEi moves as part of a single interconnected picture: currency weakness, oil-driven import costs, and now a formal warning that inflation could re-accelerate toward 7 percent all point in the same direction ahead of the BSP’s Aug. 27 decision.
RISK
SMEs with tight margins should stress-test pricing and procurement plans against a scenario where inflation re-accelerates toward 7 percent in Q3 and Q4, rather than assuming the recent easing trend continues.
NEXT MOVE
Watch the PSA’s August inflation print, due in early September, for the first real test of whether the CPBRD’s upper-range warning is materializing.
● BSP holds intervention posture steady even as peso brushes record low
WHAT HAPPENED
Despite the peso’s intraday brush with P61.995, the BSP has kept to its established position that it intervenes only to smooth disorderly market conditions and prevent inflationary swings rather than defend a specific exchange-rate level, a stance Governor Eli Remolona has repeated in recent weeks. Analysts told Manila Times the dollar’s latest strength reflects positioning ahead of the Fed minutes release and continued flight to safety amid Gulf tensions, rather than any peso-specific weakness.
UNCERTAIN
Whether the BSP would step in more forcefully if the peso’s daily close, not just its intraday level, breaches P62 has not been stated explicitly, leaving traders to watch Governor Remolona’s comments for signals ahead of the Aug. 27 meeting.
WHY IT MATTERS
A central bank that stays hands-off on the exchange rate while inflation risk is rising, as flagged in the CPBRD story above, puts more of the adjustment burden on the Aug. 27 rate decision itself, raising the odds of a hawkish outcome.
OPPORTUNITY
Businesses that rely on peso stability for planning may want to lock in near-term FX rates or import contracts now, rather than waiting for the Aug. 27 decision to potentially move rates further.
NEXT MOVE
Watch for any statement from Remolona in the run-up to Aug. 27 signaling whether the BSP sees the current peso weakness as disorderly enough to warrant more active intervention.
SECTION 2 · Worth Knowing
● Fed’s July minutes show hawkish sentiment ran deeper than the three known dissenters
WHAT HAPPENED
The Federal Reserve released minutes from its July 28-29 meeting Wednesday, confirming the 9-3 vote to hold rates at 3.50-3.75 percent but revealing that hawkish sentiment extended beyond the three dissenting regional presidents, with the minutes quoting participants saying policy tightening would likely be necessary if inflation did not decline. The meeting also included a previously undisclosed discussion, raised by Chair Kevin Warsh, about cutting the FOMC’s annual meeting count from eight to six, though no decision was reached.
UNCERTAIN
The minutes reflect thinking from before the weak July jobs report and in-line CPI data that have since pulled September hike odds down to roughly 30 percent, so how much of the hawkish tone still holds is unclear until more data arrives before the Sept. 15-16 meeting.
WHY IT MATTERS
A more broadly hawkish Fed than markets assumed adds a layer of dollar-strength risk on top of the Gulf-driven pressure already weighing on the peso, and it lands the same day the BOJ’s own hike odds are climbing, sharpening the policy-divergence dynamic covered below.
RISK
Businesses with dollar-denominated costs should watch for renewed dollar strength if incoming US data revives the case for a September hike, compounding the peso pressure already in play.
NEXT MOVE
Watch Fed Chair Warsh’s remarks at the Jackson Hole Economic Symposium later this month, and track August CPI on Sept. 11 as the next major input before the September meeting.
● UAE cuts all economic ties with Iran after accusing it of firing missiles at its territory
WHAT HAPPENED
The United Arab Emirates halted all trade, commercial exchanges, and financial transactions with Iran indefinitely after its defense ministry said it detected two ballistic missiles launched from Iranian territory, one of which fell inside UAE waters. The UAE was one of Iran’s main commercial partners, and the cutoff comes a day after a 60-day window for US-Iran peace talks expired without a breakthrough.
UNCERTAIN
Iran’s Foreign Ministry denied responsibility for the attack and called it a possible false-flag operation, and flights between the two countries continued Wednesday, so the episode’s authorship and its effect on the broader Gulf conflict remain contested.
WHY IT MATTERS
A sharper Gulf escalation, on top of Iran’s declared shift toward a fully offensive posture and continued Strait of Hormuz disruption, keeps oil prices supported near three-week highs, feeding directly into the peso and inflation pressures already covered in this edition.
RISK
Fuel-dependent businesses should treat the risk premium in oil prices as likely to persist or widen further given this fresh escalation, rather than assume a near-term de-escalation.
NEXT MOVE
Watch for any Iranian retaliation or further UAE measures, and track whether other Gulf states follow the UAE’s lead in cutting economic ties.
● BOJ September hike odds jump to near 80 percent as Japanese bond yields keep climbing
WHAT HAPPENED
Markets are now pricing in just under an 80 percent probability of a Bank of Japan rate hike in September, up from around 65 percent a week earlier, as persistent yen weakness and rising inflation expectations push policymakers toward faster tightening. MUFG Research said easing concerns about US inflation should help stabilize the 10-year US Treasury yield and take some pressure off the yen, though the structural gap between US and Japanese rates remains wide.
UNCERTAIN
The BOJ has not confirmed a September move, and Japan’s political calendar, including a possible cabinet reshuffle and questions over the fiscal-discipline stance of the finance minister, could still shift the timeline in either direction.
WHY IT MATTERS
A BOJ that hikes while the Fed’s hawkish undertone (covered above) keeps the dollar firm would widen policy divergence between the two economies, a dynamic that historically ripples into emerging-market currency positioning, including indirect pressure on the peso.
RISK
Businesses with Japan-linked trade or financing exposure should watch for continued increases in Japanese government bond yields, which raise borrowing costs and could affect investment flows into the region.
NEXT MOVE
Watch for confirmation of Japan’s cabinet lineup and any signal on the finance minister’s fate, alongside incoming inflation and wage data ahead of the BOJ’s September meeting.
SECTION 3 · THE OPPORTUNITY BEHIND THE NEWS
Three Days of Rain Is No Longer a Weather Story, It’s a Planning Constraint
Thursday marks the third straight day of suspended classes and alternative work arrangements across Metro Manila and a wide swath of Luzon. A single day of disruption is a weather event. Three days in a row, with PAGASA warning the pattern could continue through Friday, is closer to a planning constraint that businesses should be building into their near-term operations rather than treating as one-off bad luck.
The practical read for founders is to stop budgeting for isolated disruption days and start budgeting for multi-day stretches during this monsoon season. Staffing plans, delivery schedules, and client commitments that assume a quick return to normal after one bad day are increasingly out of step with what the past three days have actually looked like. Businesses that build in a standing buffer for three-to-five-day disruption windows, rather than reacting fresh each time, will handle this pattern better than those still treating each suspension as a surprise.
SECTION 4 · FOUNDER’S LESSON
A Central Bank That Doesn’t Move Is Still Sending a Signal
The BSP didn’t do anything dramatic Wednesday. It held its line that intervention is about smoothing disorder, not defending a level, even as the peso brushed a fresh intraday record. It would be easy to read that as inaction. But holding a consistent, previously stated position while conditions worsen around you is itself a decision, and often a more informative one than a sudden reversal would be.
The lesson for founders is that consistency under pressure is data. When a leader, a policy, or a business plan stays the course as conditions get harder, that tells you something about how much conviction sits behind it, separate from whether the underlying conditions are good or bad. Before assuming inaction means drift, ask whether it’s actually restraint. The two look identical in the moment, but they lead to very different outcomes six months out.
SECTION 5 · ONE REAL SIGNAL
The Hawkish Camp at the Fed Was Bigger Than the Vote Count Showed
The headline from Wednesday’s Fed minutes was always going to be the 9-3 vote and the three named dissenters. But the more useful signal buried inside is that the minutes described hawkish sentiment extending well beyond those three, with several participants judging that policy tightening would likely be necessary if inflation didn’t decline. A vote count of 9-3 looks decisive. A committee where sympathy for tightening runs deeper than the vote suggests is a very different, more fragile kind of consensus.
For Philippine businesses, this matters because it means the case for a Fed hold in September is less settled than the current roughly 30 percent hike odds suggest on the surface. If incoming US data firms up even modestly, the broader hawkish undertone revealed in these minutes gives the committee more room to shift than a narrow 9-3 vote would imply. Combined with the UAE-Iran escalation and BOJ tightening path covered elsewhere in this edition, businesses tracking currency exposure should treat the current calm in Fed expectations as more provisional than the headline vote count suggests.
Summarized in our own words with links to every source. We don’t reproduce full articles or bypass paywalls. Interpretation is labeled as such and kept separate from reported fact.
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