Notes · English

Why is the peso weak? A US$15.4 billion current-account deficit in H1 2026

The Philippines runs a current-account deficit, not a surplus: US$15.4 billion in January–June 2026. Remittances, BPO services and foreign loans financed most of it, but not all, and the peso slid to 62.85 per dollar. The BSP numbers, flow by flow.

CapsWindowPublished: September 29, 2026

Exchange rateUSDBalance of paymentsRemittances

Key takeaways

The Philippines runs a current-account deficit: US$15.4 billion in January–June 2026, 51.7% wider than the US$10.2 billion of the same period in 2025, after US$16.9 billion (3.5% of GDP) for the whole of 2025 (BSP balance of payments, BPM6).
The gap is in goods. A goods deficit of US$37.7 billion in the first half was partly offset by US$15.7 billion of secondary income, mostly overseas Filipinos' remittances, US$5.2 billion of services led by outsourcing, and US$1.4 billion of primary income.
Net financial inflows of US$12.3 billion, led by US$6.8 billion of new foreign loans and deposits and US$3.4 billion of foreign direct investment, covered most but not all of it. The overall balance of payments was US$3.9 billion in deficit in the first half and US$5.9 billion by August.
The peso's BSP monthly average went from 59.162 in January to 61.328 in August 2026, and the reference rate reached 62.850 on 16 September. BSP Governor Remolona told the Senate that with a trade deficit of about 13% of GDP, depreciation is hard to stop.

In much of Asia the currency puzzle this year is a surplus that did not strengthen the currency. The Philippines has the opposite problem. It spends more abroad than it earns, the gap is financed by remittances, outsourcing income and borrowing, and in 2026 that financing fell short often enough for the peso to slide past 62 per dollar. Here is the path of the money, using the Bangko Sentral ng Pilipinas (BSP) balance-of-payments tables.

Does the Philippines run a surplus or a deficit?

A deficit. The current account was US$15.4 billion in deficit in January–June 2026, 51.7% wider than the US$10.2 billion of January–June 2025, and US$16.9 billion, or 3.5% of GDP, for all of 2025 (BSP balance of payments, BPM6). In the second quarter alone the deficit was 7.3% of GDP.

Visual guide

Does the Philippines run a surplus or a deficit?

Full year 2025

Current account−16,851.1
Goods−67,159.6
Services+13,404.3
Primary income+4,183.3
Secondary income+32,721.0
Memo: personal remittances39,619.2

Shared linear scale from zero. Negative values extend left. Selected entries from the table below. Its dates, units, definitions and limitations still apply.

Sources ↓

US$ million (BPM6)	Jan–Jun 2025	Jan–Jun 2026	Full year 2025
Current account	−10,178.5	−15,435.7	−16,851.1
Goods	−32,632.7	−37,703.3	−67,159.6
Services	+5,140.1	+5,220.0	+13,404.3
Primary income	+1,901.4	+1,354.8	+4,183.3
Secondary income	+15,412.8	+15,692.9	+32,721.0
Memo: personal remittances	18,672.5	19,122.7	39,619.2

−US$15.4 billion

Philippine current account, January–June 2026, preliminary (BSP balance of payments, BPM6)

The goods deficit is what widened. Goods exports rose 9.2% in the first half and goods imports 12.4% (calculated from the same table). The BSP said imports grew fastest in telecommunications equipment, electrical machinery, manufacturing inputs and fuel, and that elevated global energy prices linked to the Middle East raised import payments (BSP, 11 September 2026).

What pays for the deficit?

Two groups of flows. The first is already inside the current account: remittances and outsourcing income. Secondary income, which is mostly overseas Filipinos’ transfers, brought in US$15.7 billion in the first half of 2026, enough to offset 42% of the goods deficit. Services added US$5.2 billion; the BSP credits business process outsourcing (BPO) revenues and travel receipts. Without secondary income the first-half current-account deficit would have been about US$31.1 billion (calculated).

The second group is the financial account: money that comes in because someone lends to or invests in the Philippines. In BPM6 terms, a positive net acquisition of assets means residents sending money out to buy foreign assets; a positive net incurrence of liabilities means non-residents putting money in. The table shows each line in that plain-language direction.

Flow, January–June 2026	US$ million	What it means
Foreign loans and deposits received (other investment, liabilities)	+6,819.6	Banks and firms borrowed abroad; money came in
Residents cut foreign loans and deposits (other investment, assets)	−2,495.7	Resident banks reduced claims on non-residents; money came home
Foreign direct investment into the Philippines	+3,381.9	Money came in
Philippine direct investment abroad	−289.1	Small net withdrawal; money came home
Foreigners’ net purchases of Philippine stocks and bonds	+794.7	Money came in (−1,003.6 in Q1, +1,798.3 in Q2)
Residents’ net purchases of foreign securities	+1,409.4	Money went out
Net unclassified items	−756.0	Flows not captured elsewhere
Overall balance of payments	−3,876.9	Shortfall met from reserves

Net, the financial account brought in US$12.3 billion against the US$15.4 billion current-account gap. The rest showed up as an overall balance-of-payments deficit of US$3.9 billion, or 1.6% of GDP, which the BSP noted was smaller than the US$5.6 billion of the first half of 2025 because financial-account inflows, mainly foreign loans, were stronger (BSP). Residents buying foreign securities, including the US stock funds discussed in the note on US stock returns in pesos, are one of the outflows, but in this half-year they were smaller than the loan inflows.

Why did the peso still fall to record lows?

Because in the months when the peso moved most, financing fell short. The table lines up the monthly figures published so far: the current account through June, the overall balance through August, and the BSP’s monthly average exchange rate.

2026	Current account (US$ m)	Overall BOP (US$ m)	Peso per US$, BSP monthly average
January	−1,928.5	−373.2	59.162
February	−1,322.0	−2,277.4	58.280
March	−3,216.8	−2,637.0	59.407
April	−4,220.4	−2,123.6	60.291
May	−3,264.8	+131.1	61.441
June	−1,483.3	+3,403.1	61.251
July	not yet published	−1,470.0	61.596
August	not yet published	−596.3	61.328

The sharpest move came in March and April, when the current-account deficit was largest and foreigners were net sellers of Philippine securities: portfolio liabilities were −2,061.1 and −1,436.3 million dollars in those two months (BSP BPM6 monthly). For the first quarter the BSP said banks repaid foreign loans, non-residents withdrew currency and deposits from local banks, and foreign investors withdrew from Philippine debt securities (BSP). June was the exception: US$6.2 billion of foreign loans and deposits and US$3.1 billion of foreign portfolio buying produced a US$3.4 billion surplus, and the monthly average steadied. July and August were back in deficit, bringing January–August to −US$5.9 billion, against −US$5.4 billion a year earlier (BSP overall BOP).

On the BSP reference rate, the peso’s weakest level before this year was 59.212 on 11 December 2025. It passed that on 8 January and reached 62.850 on 16 September 2026 (BSP). Market closing rates reported in the press followed a similar path; GMA News counted the 8 September close of 62.625 as the 23rd record low of 2026 (GMA News).

How does the BSP explain it?

Three statements, in the BSP’s words or as reported.

The flows. In its August release the BSP said the January–August deficit "reflected the continued trade-in-goods deficit and net outflows from foreign portfolio investments," partly offset by "personal remittances of overseas Filipinos, foreign borrowings by the NG, trade in services, and foreign direct investment" (BSP, 18 September 2026).

The structure. Governor Eli Remolona told a Senate hearing in late August: "we've had a trade deficit that's about 13% of our gross domestic product ... Our exports are really lacking, so it's hard to stop the peso depreciation," and said reserves could run out if the BSP tried to hold the peso without addressing exports (BusinessWorld, 1 September 2026).

The policy. The BSP "allows the exchange rate to be determined by market forces" and participates "largely to dampen inflationary swings in the exchange rate over time rather than to prevent day-to-day volatility" (BSP statement on the peso). Its July reserves release listed "net foreign exchange operations" among the reasons reserves fell (BSP).

Gross international reserves were US$110.8 billion at the end of 2025 and US$104.8 billion at the end of August 2026, when the BSP said they covered 6.6 months of imports and about 3.3 times short-term external debt by residual maturity. How that buffer compares with other markets is in the note on reserves and short-term debt.

Are remittances still growing?

Yes, but more slowly. Personal remittances were US$22.7 billion in January–July 2026, up 2.3% from US$22.2 billion a year earlier, after growth of 3.3% for 2025 as a whole (BSP remittances). Cash remittances through banks rose 1.9% in July. A weaker peso raises the peso value of each remitted dollar, but the dollar amount is what enters the balance of payments, and that grew less than the import bill.

What to watch next

The BSP publishes the overall balance of payments monthly and the full breakdown by account quarterly. The July–August breakdown, which would show whether the portfolio outflows the BSP describes came from foreigners selling or from residents buying abroad, is not yet published. Three lines are worth checking when it is: goods imports (energy prices), other-investment liabilities (foreign borrowing, which carried the first half) and portfolio liabilities (foreign buying or selling of Philippine securities). This site does not forecast exchange rates; it tracks what the published flows show.

What to keep in mind when reading these numbers

Revisions. 2026 figures are preliminary and 2025 figures are revised. The 2025 current-account deficit was first announced as US$16.3 billion in March 2026; the current BSP table shows US$16,851.1 million.

Basis. Everything here is on the balance-of-payments (BPM6) basis. Merchandise trade figures from the Philippine Statistics Authority use a customs basis and are not used or mixed in. The BSP's portfolio "net outflows" for January–August and the first-half BPM6 portfolio lines cover different periods and are not directly comparable.

Unclassified items and exchange rates. Net unclassified items were −US$756.0 million in the first half, so the lines do not sum exactly. Peso rates in this note are the BSP's own monthly averages and daily reference rates; they differ slightly from the BIS series used in CapsWindow's calculators and in the companion note on US stocks. See Data & methodology.

See what a peso amount was worth on different dates →

Questions & answers

Why is the peso weak?

On the BSP's figures, because more dollars have been leaving than arriving. The current account was US$15.4 billion in deficit in January–June 2026, mainly from a US$37.7 billion goods deficit. Remittances, outsourcing income, foreign loans and direct investment covered most of that, but the overall balance of payments was still US$5.9 billion in deficit for January–August. The BSP lists the goods deficit and net outflows from foreign portfolio investments as the drivers.

Does the Philippines have a trade surplus or a trade deficit?

A deficit. On the balance-of-payments basis the goods deficit was US$67.2 billion in 2025 and US$37.7 billion in the first half of 2026. Services, income and remittances are in surplus, but not by enough to close the goods gap, so the current account is in deficit too: US$16.9 billion in 2025 and US$15.4 billion in the first half of 2026.

Don't OFW remittances keep the peso strong?

They keep it from being much weaker. Personal remittances were US$39.6 billion in 2025 and US$22.7 billion in January–July 2026, up 2.3%. They are already counted inside the current account, mostly in secondary income, which was US$15.7 billion in the first half of 2026, with workers' compensation abroad in primary income. Without secondary income the first-half deficit would have been about US$31.1 billion, but even with it the account stayed in deficit.

Is the BSP defending the peso?

The BSP says it lets the market set the exchange rate and participates mainly to dampen inflationary swings rather than day-to-day moves. Its July 2026 reserves release named its net foreign exchange operations among the reasons reserves fell. Gross international reserves were US$110.8 billion at end-2025 and US$104.8 billion at end-August 2026.

When do new balance-of-payments figures come out?

The BSP publishes the overall balance of payments monthly, roughly two to three weeks after the month ends; the August 2026 figure came out on 18 September. The full breakdown by account is published quarterly; the first-half 2026 breakdown came out on 11 September. The next dates are set by the BSP's release calendar.

Source

Calculators

Past money valuePast money value · PHP

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