The Philippine peso crossed the P60-per-dollar threshold for the first time on Thursday, dragged down by a confluence of geopolitical shocks, elevated oil prices, and the US Federal Reserve’s decision to hold interest rates steady — all of which also pushed the stock market into the red before a late-session recovery trimmed losses.
Oil prices surged after Iran moved to strike energy infrastructure across the region following an Israeli attack on the South Pars gas field, compounding pressure on a currency already sensitive to import costs. For OFW remittances, the weaker peso means AED 1 now converts to more than ₱16 — a figure that has held above that level since mid-March as the dirham benefits from oil-linked Gulf stability while the peso bears the burden of energy import exposure.
MUFG senior currency analyst Lloyd Chan tied the peso’s vulnerability directly to fuel costs. “Higher oil prices are going to deliver in terms of trade shock for the Philippines and are going to weigh on the current account,” he said. He added that signals from the central bank pointing to a possible rate hike in April were the right call: “I think that’s the appropriate response, given the inflation risk.”
The peso closed at ₱60.1 to the dollar, down 58 centavos from the previous session’s ₱59.871. It opened at ₱59.9, briefly hit ₱60.4 during intraday trade, and saw volume swell to ₱2.437 billion from ₱1.777 billion.
A trader noted that the combination of Fed rate policy, high oil, and regional conflict “continues to pressure the peso, with any recovery likely gradual and dependent on a clearer shift in US policy and softer oil.”
The Bangko Sentral ng Pilipinas stopped short of signaling any specific defense of the peso’s level, reiterating that it steps into the foreign exchange market only when volatility becomes excessive. “This is consistent with a flexible exchange rate policy, with intervention limited to tempering large swings that could affect inflation rather than defending any specific level,” the BSP said.
Equities also took a hit. The Philippine Stock Exchange index dropped as low as 5,934.68 before buyers returned in the final 15 minutes, pulling it back to close at 6,018.62 — a loss of 36.83 points or 0.61 percent. The All Shares index fell 18.69 points or 0.56 percent to 3,344.8.
Mining and oil stocks bore the sharpest losses, shedding 6.7 percent, while industrials were the only sectoral gainer, edging up 0.14 percent. Decliners outnumbered advancers 133 to 61, with 55 issues flat.
Unicapital Securities head of research Wendy Estacio-Cruz said the sell-off mirrored broader anxieties about inflation. “We think ongoing geopolitical tensions will remain an overhang, with persistent inflation and global uncertainties likely to keep financial conditions tight and cap near-term upside,” she said.
The BSP’s potential April rate move now sits at the center of investor attention as the central bank weighs inflation risk against already-slowing growth.
