DOVISH signals from the Philippine central bank's policymaking body are contributing to the currency's weakness, Maybank Research said, with the peso-dollar rate likely to return to the record P60:$1 low this quarter.

"[A] downward trajectory is intact" for the peso-dollar rate, Maybank Research in a July 1 report, adding that the currency was likely to be weighed down by the possibility of the Bangko Sentral ng Pilipinas (BSP) cutting key interest rates ahead of the US Federal Reserve.

It noted that the central bank had signaled the possibility of an August rate cut and a total reduction of 50 basis points for this year given improvements to the inflation outlook.

Maybank Research revised its peso-dollar outlook to P60:$1 for the third quarter, from P57 previously, and also those for the fourth quarter and the first quarter of next year to P58.50 and P58, respectively, from P56.25 and P55.50.

The exchange rate, it added, is likely to ease to P57 to the dollar in the second quarter of 2025.

An expected 25-basis point cut by the Fed this year, Maybank Research said, "should give much relief and guide the USDPHP (dollar-peso rate) downwards in the medium term."

The peso has been trading in the P58:$1 level for over a month after BSP Governor Eli Remolona Jr. indicated that an easing could start in August, which would make Philippine assets less attractive.

The record P60:$1 low was hit in October 2022 after the BSP failed to match aggressive interest rate hikes by the Fed.

On Tuesday, the peso weakened by 14 and a half centavos and closed at P58.795 against the dollar.

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