THE Philippine Peso’s weakness against the US dollar is a major economic storyline this year, contributing to higher inflation across many of the products the Philippines imports to support economic activity. Fuel, vehicles, hardware, semiconductors, rice, meat, and dairy are just some of the many imports commonly purchased in US dollars. That means the list of items growing more expensive every time the peso depreciates against the dollar is also long. What does this mean for your savings?
First, the peso’s weakness is eating into your peso-denominated savings and maybe even your other assets. If you earn primarily in pesos, as an employee or local business owner, your pesos aren’t pulling their weight. Your buying power is sinking, and if you are maintaining your standard of living, you are likely dipping into your savings just to keep up. This is especially dangerous if you have dollar-denominated expenses or debt. That is a double whammy that is untenable.
Second, the peso’s weakness is bolstering the value of your dollar-denominated savings and assets. If you earn in US dollars, as an overseas Filipino worker, an exporter of goods, or a freelancer in the global gig economy, the greenbacks you hold can significantly increase your purchasing power relative to peso earners. The dollars you earn allow you to keep up with inflation, and the dollars you’ve saved give you extra buying power if you decide to use them. If you’ve invested in dollar-denominated assets, their value is up relative to the peso.
It isn’t all bad news, as this situation has also created a few opportunities. The opportunities, however, are largely limited to those who can take advantage of the widening gap in the dollar peso exchange rate.
OFWs can utilize their added spending power for investment and other business activities. They are well positioned to fill any void created as peso-earners retreat from economic activity. They can pursue education, build savings, or invest in income-generating opportunities. They can buy assets peso-earners are selling to help offset the weakness of the peso. They can even save more dollars wherever they are since they can send back less dollars to cover the needs of their Philippine-based loved ones.
Exporters and Filipino BPOs serving foreign clients can offer their products and services more competitively in international markets. They are in fact more competitive because some of their costs are peso-denominated while their income is dollar-denominated. Businesses whose revenues and expenses are both dollar-denominated don’t benefit because their costs rise in step with their earnings. Here are a few things you can do to make sure you don’t suffer too much when the peso weakens against foreign currency.
One, diversify your currency holdings. Maintain some holdings in dollars and pesos or at least avoid concentrating your assets in any single currency. The Philippines is so interconnected with the United States and other dollar using jurisdictions that so many Filipinos can gain access to US dollars at some point in their lives. If you get dollars, earned, or gifted from family or friends, try to save them. This is quite easy in this day and age. Banks offer both peso and dollar-denominated savings accounts with minimal opening and maintaining balance requirements.
Match the currency of your expenses and your income. If you only earn pesos, do not take out a dollar-denominated loan. That is a recipe for disaster. Mis-matched debt and foreign exchange fluctuations were the driving forces behind the Asian financial crisis in the late 90s when local institutions only earning in their respective currencies were torpedoed by massive dollar-denominated liabilities. Such foreign exchange fluctuations can quickly turn any perceived advantage from borrowing in foreign currencies into major financial losses.
Support local products and services. If you spend in peso, the exchange rate matters less. Try to avoid imported items whenever it is practical. While the Philippines is a big importer of a lot of items, there are still local industries that can be relied on. Do a little research, cut your spending on imports, and support Pinoy industries. Aside from avoiding forex risks, you help develop local businesses and contribute to community building.
The peso-dollar exchange rate affects people differently. For those earning in dollars, the peso’s weakness creates opportunities. For others, especially households dependent solely on peso income, it can reduce purchasing power and strain family budgets. The key is not to predict the exchange rate but to prepare for it. By diversifying savings, matching the currency of income and obligations, controlling spending, and maintaining a strong savings buffer, Filipinos can remain financially resilient regardless of where the exchange rate goes.
Warren Augustus D. de Guzman is a Registered Financial Planner of RFP Philippines. To learn more about personal financial planning, attend the 118th RFP program this October 2026. Email [email protected] or visit rfp.ph to learn more about the program.
