THE PESO weakened on Wednesday to match its all-time low against the US dollar as a re-escalation within 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 greater than two months. It first closed at a record low of P61.75 against the greenback on May 18.
12 months so far, 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 within the foreign exchange market to support the peso.
The Bangko Sentral ng Pilipinas (BSP) sold dollars within the onshore market on Wednesday, traders conversant in the matter said, asking to not be identified because they aren’t authorized to talk 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 barely 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 as a consequence of an absence of key developments within the Middle East conflict, the primary trader said by phone, noting “a little bit of upside pressure as a consequence of higher global crude oil prices.”
“The peso weakened to record lows today because 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 Business 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 within the near term.
“The continued weakness of the peso will definitely weigh on inflation, especially keeping inflation elevated even when oil prices retreat from prewar levels as a consequence of 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 more likely to remain trading across the P61.75 level within the near term, “with out 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 due to this fact add to inflationary pressures, particularly if accompanied by persistently elevated global oil prices,” she said in a Viber message.
Each the primary 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 as a consequence of profit taking.
“The peso will remain weak as a consequence of still net negative dollar outflows within the country despite the recent rate hikes by the BSP,” the second trader said.
The primary trader said the BSP have enough reserves to defend the peso at its current level, but a complete escalation within the war resembling the continued closure of the Strait of Hormuz, one other spike in oil prices, and attacks on key states of Iran could bring the peso to latest lows.
“The BSP might consider occasional interventions with the intention to anchor the local currency as supported by fundamentals, however the BSP will likely bring the peso in step with any further strengthening of the greenback,” the second trader said.
Mr. Remolona earlier said the central bank doesn’t defend a particular level for the peso but only intervenes within the foreign exchange market to forestall inflationary swings. — Aaron Michael C. Sy with Bloomberg