THE PHILIPPINE PESO on Thursday hit a record-low P59-a-dollar level for the first time in more than two years as the dollar continued its rally.

The peso closed at P59 against the greenback at the end of trading, weaker by nine centavos from its P58.91 finish on Wednesday.

This marked the first time the peso returned to the P59-a-dollar level since Oct. 17, 2022.

The peso opened Thursday’s trading session at P58.93 versus the dollar. Its intraday best was P58.92, while its weakest showing was its close of P59.

Dollars traded dropped to $842.68 million from $1.09 billion on Wednesday.

“The USD/PHP weakness reflects the recent rise in (10-year US Treasury yields), reflecting Trump 2.0 policies and causing the dollar to rise,” Jonathan L. Ravelas, senior adviser at professional service firm Reyes Tacandong & Co., said.

Economists have been warning that US President-elect Donald J. Trump’s proposed tariffs and tax cuts could stoke inflation and potentially hamper the US Federal Reserve’s easing cycle.

Reuters reported that markets are pricing in a 52% chance of a 25-basis-point (bp) cut at the Fed’s December meeting, down from 82.5% a week ago, according to CME’s FedWatch Tool.

A Reuters poll showed most economists expect the Fed to cut rates at its December meeting, with shallower cuts in 2025 than expected a month ago due to the risk of higher inflation from Mr. Trump’s policies.

The first trader said the peso slump was also due to the “function of a stronger dollar and uncertainty of the Fed direction under Trump, plus mixed signals from the Bangko Sentral ng Pilipinas (BSP).”

“This also reflects expectations of rate cuts by BSP. This could persist in 2025. The near-term risk is P60,” Mr. Ravelas added.

BSP Governor Eli M. Remolona, Jr. this week gave mixed signals, saying the Monetary Board can either keep or cut rates at its Dec. 19 policy meeting.

He said inflationary pressures would warrant a pause, while weaker-than-expected growth would pave the way for another rate cut.

Since August, the BSP has delivered a total of 50 bps worth of rate cuts, bringing the benchmark to 6%.

“The peso continued to depreciate, closing at the 59 level, with the ongoing uncertainty on the composition of Trump’s economic team,” the second trader said.

Mr. Trump’s pool for a Treasury secretary pick widened to include Apollo Global Management Chief Executive Marc Rowan and former Federal Reserve Governor Kevin Warsh, Reuters reported.

Mr. Trump said he would nominate Howard Lutnick, chief executive of Wall Street brokerage firm Cantor Fitzgerald, as head of the Commerce Department.

The second trader also noted “escalating tensions between Russia and Ukraine exert increased safe-haven demand for the greenback.”

Russia launched an intercontinental ballistic missile from its southern Astrakhan region during a morning attack on Ukraine on Thursday, Reuters reported, citing Kyiv’s air force. It was the first time Russia has used such a powerful, long-range missile during the war.

The air force reported the launch after Ukraine fired US and British missiles at targets inside Russia this week, despite warnings by Moscow that it would see such action as a major escalation in the 33-month-old war. — Luisa Maria Jacinta C. Jocson with Reuters