Exploring the Philippine Peso: History and Impact (2024)

The Philippine peso, the official currency of the Philippines, serves as a vital component of the nation’s economic framework. Its evolution and current state are not just indicators of economic health but also reflect the country’s rich historical tapestry.

Understanding the peso involves more than recognizing its physical form; it requires an appreciation of its influence on both macroeconomic stability and everyday transactions. This exploration offers insights into how this currency shapes business, government policy, and individual financial decisions across the archipelago.

Historical Development of the Philippine Peso

The origins of the Philippine peso trace back to the Spanish colonial era, when the Spanish introduced their currency to the Philippines. This period marked the beginning of formal currency usage in the archipelago, replacing a barter system that had previously been prevalent among the islands. The term “peso” itself was derived from the Spanish word for weight, reflecting the method of valuing coins based on their weight in silver or gold.

As the Philippines transitioned from Spanish to American control in the late 19th and early 20th centuries, the currency system underwent significant changes. The introduction of the Philippine peso as it is recognized today occurred in 1903 under American administration, which established the peso’s initial link to the gold standard. This move was part of a broader effort to create a stable economic environment in the Philippines by providing a reliable and consistent medium of exchange.

Throughout the 20th century, the Philippine peso experienced numerous transformations in response to varying economic conditions and political events. World War II, for instance, saw the introduction of emergency currency, often referred to as “guerrilla money,” which was issued by various provinces and resistance groups. This period highlighted the peso’s role not just as a tool for economic transactions but also as a symbol of local resilience and autonomy.

Post-war recovery and the eventual move towards independence saw the Central Bank of the Philippines, established in 1949, taking charge of issuing currency. This era was characterized by efforts to stabilize and strengthen the currency to foster economic growth and development. The peso was pegged to the United States dollar initially, a system that lasted until the early 1970s when the country shifted to a managed currency float system, reflecting a more mature and autonomous economic policy framework.

Current Denominations of Philippine Currency

The Philippine peso today is issued in a variety of denominations, each designed to facilitate ease of transactions and reflect the nation’s cultural heritage. These denominations are divided into coins and banknotes, each serving specific roles within the economy.


Philippine coins are issued by the Bangko Sentral ng Pilipinas (BSP) and come in several denominations, including 1, 5, 10, and 25 centavos, as well as 1, 5, 10, and 20 pesos. The design of these coins incorporates elements that are emblematic of Filipino culture and history. For instance, the 1 peso coin prominently features the national hero, Jose Rizal. The smaller denominations display images of native flora, while the higher denominations showcase significant events and figures in the country’s history, such as the Leyte Landing on the 5 peso coin. These coins are not only functional but also serve as a tool for national identity reinforcement.


The current series of Philippine banknotes, also known as the “New Generation Currency,” includes denominations of 20, 50, 100, 200, 500, and 1000 pesos. Each note is distinct in color and design, featuring prominent Filipinos and iconic natural wonders. For example, the 1000 peso note depicts three World War II heroes: Josefa Llanes Escoda, Vicente Lim, and Jose Abad Santos. In contrast, the reverse side typically illustrates significant ecosystems and cultural sites, such as the Tubbataha Reefs Natural Park on the 1000 peso note. These banknotes are equipped with advanced security features, including holograms, embossed prints, and color-changing inks, to prevent counterfeiting. The design and security measures of these banknotes reflect a blend of aesthetic consideration and technological advancement, ensuring both functionality and integrity in the nation’s currency system.

Factors Influencing the Peso’s Value

The value of the Philippine peso is shaped by a confluence of international and domestic factors, each interplaying to determine its strength relative to other currencies. On the international front, global market dynamics exert a significant influence. For instance, the US dollar’s performance often sways the peso’s value, as the dollar is a benchmark currency used in international trade. When the dollar strengthens, the peso typically depreciates in comparison, and vice versa. Additionally, foreign direct investment (FDI) flows into the Philippines can bolster the peso, as higher levels of FDI suggest confidence in the Philippine economy, increasing demand for the currency.

Domestic economic indicators also play a substantial role. The Philippines’ balance of trade, which measures the difference between the value of exports and imports, directly impacts the peso. A trade surplus, where exports exceed imports, usually leads to a stronger peso as foreign buyers convert their currency to pesos to pay for Philippine goods. Conversely, a trade deficit can weaken the currency. Moreover, inflation rates within the country can affect the peso’s purchasing power, with higher inflation typically leading to depreciation.

Monetary policy decisions by the Bangko Sentral ng Pilipinas (BSP) are instrumental in shaping the peso’s trajectory. Interest rate adjustments, for example, can either attract or dissuade foreign investment. An increase in interest rates may draw investors seeking higher returns, thus increasing demand for the peso. On the other hand, lowering rates might lead to capital outflows, resulting in a weaker peso. The BSP’s interventions in the foreign exchange market, whether through direct buying or selling of pesos, also serve to stabilize the currency’s value.

Economic Impact of the Philippine Peso in the Philippines

The Philippine peso’s stability is closely tied to the overall economic health of the country, influencing both macroeconomic outcomes and the daily lives of its citizens. A stable peso fosters an environment conducive to investment, both from domestic and international sources. When investors perceive the currency as stable, they are more likely to commit capital to long-term investments in the country’s industries and infrastructure. This influx of investment not only drives economic growth but also creates jobs, thereby enhancing the livelihoods of many Filipinos.

On a more granular level, the purchasing power of the peso directly affects consumer behavior and spending. When the peso is strong, imported goods become cheaper, allowing consumers to stretch their income further. This can lead to increased consumer spending, which is a significant component of the country’s GDP. Conversely, a weak peso can stifle consumer spending as import prices rise, leading to inflationary pressures that erode purchasing power and dampen economic growth.

The exchange rate of the peso also impacts the government’s fiscal policy. A stronger peso can reduce the cost of servicing foreign debt, as fewer pesos are needed to meet foreign-denominated obligations. This can free up resources for public spending on essential services such as education, healthcare, and infrastructure development, further stimulating economic activity.

Exploring the Philippine Peso: History and Impact (2024)


What is the history of currency in the Philippines? ›

In 1898, the country issued its currency backed by the Philippines' natural resources. In 1902, the US captured the Philippines and established a new currency pegged to gold, about half the price of a US dollar then. In 1993, the Philippine peso became a floating currency.

What is the impact of the pesos depreciation on the Philippine economy particularly on inflation and foreign investments? ›

Moreover, tourism and investment activities will increase as it will be less costly and more desirable for foreigners to travel and invest in the Philippines. However, peso depreciation can also increase inflationary pressures as it would cost more pesos to buy imported products and raw materials such as oil and rice.

What is the real problem why the Philippines peso has a lower value in the market? ›

The Bottom Line

The value of the Philippine peso declined in 2021 and is projected to decline further in 2022. The aura of economic uncertainty surrounding the COVID-19 pandemic and the government's response to it has helped to depress its value against the U.S. dollar.

What is happening to the Philippine peso? ›

It is now hovering around 58.20, edging closer to the record low of 59.20 set in October 2022. This decline marks the peso as one of the worst-performing currencies in Asia this quarter.

What is the history of the peso? ›

Originally divided into eight reales, the peso subsequently became the basis of the silver coinage of the Spanish empire after the monetary reform of 1772–86. In the Americas it was called “piece of eight,” or “Spanish milled dollar,” and was, in fact, equivalent to the U.S. silver dollar.

When was the Philippine peso at its highest? ›

Historically, the Philippine Peso reached an all time high of 59.20 in September of 2022. Philippine Peso - data, forecasts, historical chart - was last updated on May 31 of 2024.

Which is an effect of the weakening of the Philippine peso? ›

The ripple effects of a weakened peso extend beyond the realm of consumer goods. The increase in the cost of imported inputs could also impact domestic industries, leading to higher production costs and potentially dampening economic growth.

How does dollar rate affect Philippine economy? ›

The exchange rates play a crucial role in the economy. The fluctuations affect the prices of imported goods, services, and assets in the country. Conversely, it affects the prices of exported goods and allows economists to forecast future price movements.

Why is the Philippines suffering from high inflation? ›

Key drivers of inflation in the Philippines

The rise in headline inflation in 2022 was largely driven by external supply factors such as surges in international commodity prices due to global supply chain disruptions and depreciation of the local currency.

How does the value of the peso impact the Philippine economy? ›

Additionally, real peso depreciation has a positive effect on real GDP in the Philippines. On the other hand, devaluations can lead to a decline in foreign reserves for the economy, which may hurt the trade balance. Furthermore, devaluation may be stagflationary and not lead to an expansion in output and exports.

What is the highest currency in the Philippines? ›

The lowest denomination of the series is 1-piso and the highest is 100-piso. For table standards, see the banknote specification table.

Why is the peso getting stronger against the dollar? ›

Mexican interest rates 5% higher than US rates

This significant rate difference plays a key role in influencing the USD/MXN exchange rate, making Mexican assets more attractive to yield-seeking investors and supporting the peso's strength.

Why is PHP getting stronger? ›

The Philippine central bank, the Bangko Sentral ng Pilipinas (BSP), has hiked rates by 375 basis points (bps) since June 2022, to cool inflation and support the peso. Given that the Philippines is very dependent on imported food and energy, a weak peso can raise imported inflation, making the economic backdrop worse.

What is the symbol for Philippine pesos? ›

The peso is usually denoted by the symbol "".

Is the Philippine peso going up or down? ›

The USD to PHP exchange rate is forecasted to increase by 0.19% in the next 24 hours, rising from the current rate of ₱ 58.50 to ₱ 58.61. Currently, the sentiment in the USD/PHP market is estimated to be bullish.

What was the currency of the Philippines during the American colonization? ›

American Period

The Americans instituted a monetary system for the Philippine based on gold and pegged the Philippine peso to the American dollar at the ratio of 2:1. The US Congress approved the Coinage Act for the Philippines in 1903.

What was the Philippine currency in ww2? ›

During World War II in the Philippines, the occupying Japanese government issued a fiat currency in several denominations; this is known as the Japanese government-issued Philippine peso (see also Japanese invasion money).

What is the currency used in the Philippines Why do you think this is so? ›

The currency in the Philippines is the Philippine peso. Each peso is divided into 100 sentimos. When you're buying currency for the Philippines, look out for the currency code PHP. And once you're in the Philippines, you'll see the symbol ₱ used to show prices.

Why dollar is important in the Philippines? ›

The US dollar is one of the hard currencies, which means its value doesn't fluctuate as much as the Philippine peso. So, by saving in USD, you afford a higher level of security for your savings. You have a higher chance of getting more value out of the dollar even against inflation in the Philippines.

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