THE PESO weakened on Wednesday to match its all-time low against the US dollar as a re-escalation in the Middle East conflict heightened concerns over inflation risks.
The Philippine peso closed at P61.75 against the US dollar on Wednesday, inching down by half a centavo from P61.745 on Tuesday, based on data on the Bankers Association of the Philippines’ website.
This was the peso’s worst close in more than two months. It first closed at a record low of P61.75 against the greenback on May 18.
Year to date, the local unit has depreciated by P2.96 or 4.79% from its P58.79 finish on Dec. 29, 2025.
Bloomberg reported that the Philippine central bank intervened in the foreign exchange market to support the peso.
The Bangko Sentral ng Pilipinas (BSP) sold dollars in the onshore market on Wednesday, traders familiar with the matter said, asking not to be identified because they aren’t authorized to speak publicly.
BSP Governor Eli M. Remolona, Jr. didn’t reply to a Bloomberg query confirming the central bank’s dollar sales.
The peso opened Wednesday’s session slightly stronger at P61.73 versus the greenback, which was already its intraday best. Its worst showing was its closing value of P61.75, which it also touched on Tuesday.
Dollars exchanged surged to $1.269 billion on Wednesday from $752.5 million a day prior.
The dollar-peso closed a tad weaker on Wednesday but traded sideways due to a lack of key developments in the Middle East conflict, the first trader said by phone, noting “a bit of upside pressure due to higher global crude oil prices.”
“The peso weakened to record lows today as the US intensified its military offensives in Iran,” the second trader said in a Viber message.
The greenback was generally stronger on Wednesday as surging oil prices have heightened expectations of a rate hike by the US Federal Reserve as soon as October, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message, adding that he expects the peso to trade between P61.60 and P61.80.
Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas also said in a Viber message that escalating attacks between the US and Iran and increasing oil prices have renewed inflationary concerns.
Mr. Ravelas said the local currency could move between P61.60 and P61.90 levels in the near term.
“The continued weakness of the peso will certainly weigh on inflation, especially keeping inflation elevated even if oil prices retreat from prewar levels due to higher pass-on cost in food imports,” a second trader likewise said in a Viber message.
China Banking Corp. Chief Economist Domini S. Velasquez said the peso is likely to remain trading around the P61.75 level in the near term, “without a credible signal that tensions are easing or a resolution is in sight.”
“Based on our estimates, every P1 depreciation of the peso adds around 0.03 percentage point (ppt) to inflation, reflecting our assumption that roughly 15% of the CPI (consumer price index) basket is imported. A sustained depreciation could therefore add to inflationary pressures, particularly if accompanied by persistently elevated global oil prices,” she said in a Viber message.
Both the first and second traders see the peso moving between P61.60 and P61.75 against the greenback on Thursday, with the second trader noting a possible recovery due to profit taking.
“The peso will remain weak due to still net negative dollar outflows in the country despite the recent rate hikes by the BSP,” the second trader said.
The first trader said the BSP have enough reserves to defend the peso at its current level, but a total escalation in the war such as the continued closure of the Strait of Hormuz, another spike in oil prices, and attacks on key states of Iran could bring the peso to new lows.
“The BSP might consider occasional interventions in order to anchor the local currency as supported by fundamentals, but the BSP will likely bring the peso in line with any further strengthening of the greenback,” the second trader said.
Mr. Remolona earlier said the central bank does not defend a specific level for the peso but only intervenes in the foreign exchange market to prevent inflationary swings. — Aaron Michael C. Sy with Bloomberg
