By Aaron Michael C. Sy, Reporter
THE PESO tumbled to a brand new all-time low on Tuesday, breaching the P61 mark versus the dollar for the primary time in history, on heightened inflation worries as global oil prices surged again after peace talks between the USA and Iran hit a deadlock.
The currency closed at P61.30 a dollar, plunging by 59 centavos from Monday’s P60.71 finish, based on Bankers Association of the Philippines data posted on its website.
This surpassed the previous all-time-low close of P60.748 logged on March 31. That is now also the worst level ever hit by the peso, beating the P60.84 recorded on March 30.
12 months to this point, the peso has weakened by P2.51 or 4.09% from its P58.79 finish on Dec. 29, 2025.
Tuesday’s drop was also its biggest one-day decline in over seven months or because it sank by 63.9 centavos on Sept. 25, 2025.
The peso opened Tuesday’s trading session weaker at P60.80 against the greenback. Its intraday best was at P60.77, while its worst showing was its closing level of P61.30.
Dollars traded jumped to $1.75 billion from $1.41 billion within the previous session.
The peso’s weakness continued to be driven by the closure of the Strait of Hormuz resulting from the US-Iran conflict, which has pushed up global oil prices, HSBC Senior ASEAN (Association of Southeast Asian Nations) Economist Aris D. Dacanay said at a media briefing on Tuesday.
“I don’t think it’s peso-driven. I believe it’s dollar-driven. And you would see that with the depreciation across all other currencies.”
High demand for dollars amongst importers likely also led to Tuesday’s drop, Robert Dan J. Roces, an economist at SM Investments Corp., said in a Viber message.
“The move above P61 doesn’t mean the BSP (Bangko Sentral ng Pilipinas) hike failed. It helped, but stronger forces are at work. US rates are still high, the dollar is robust, and money is moving out of emerging markets,” he said.
“The market is taking a look at where rates are headed, not only the last move, and should be seeing a narrow gap with the US. The peso’s weakness is driven more by global aspects, and the hike likely slowed the drop relatively than reversed it.”
On Tuesday, Brent crude oil surged 2.7% to $111.20 a barrel, a three-week high, while US oil climbed 2.9% to $99.10, Reuters reported.
The US was reviewing Tehran’s latest proposal to resolve the war, at the same time as a US official said President Donald J. Trump was unhappy with the plan because it didn’t address Iran’s nuclear program.
That leaves the two-month-long conflict at an impasse with energy and other supplies through the critical Strait of Hormuz still mainly shut.
The Philippines is a net oil importer, sourcing the majority of its supply from the Middle East and making it extremely vulnerable to global price shocks.
Higher fuel costs resulting from the continuing war have threatened the domestic inflation outlook, prompting the BSP’s Monetary Board to hike benchmark rates of interest by 25 basis points last week. This was the primary increase in over two years.
BSP Governor Eli M. Remolona, Jr. also left the door open to further tightening via “a succession of modest rate hikes” as they fight to quell spiraling prices.
This, because the central bank now expects headline inflation to exceed its 2%-4% tolerance band until next 12 months. It raised inflation forecasts to six.3% for 2026 and 4.3% for 2027 from 5.1% and three.8% previously.
Inflation already breached the goal in March, hitting a two-year high of 4.1% and bringing the three-month average to 2.8%.
The peso’s depreciation past the P61 mark “keeps imported inflation risks alive — fuel, food, and power costs rise — so the BSP’s hawkish bias stays intact and rate cuts are harder to justify,” Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said in a Viber message.
“From a markets perspective, fresh record lows hurt sentiment and lift risk premiums, while growth takes a near-term hit as higher inflation squeezes consumers and tight financial conditions curb investment.”
Meanwhile, Mr. Dacanay said the peso’s inflation pass-through will not be that strong yet at the moment level as this depreciation was mostly expected, even before the Iran war broke out.
“So, all the costs that we see immediately have already priced within the peso to achieve P61 a dollar… So, immediately, I don’t think there’s an enormous inflationary effect, aside from people who follow it quite closely, akin to fuel and electricity.”
The BSP has said that it only intervenes within the foreign exchange market to temper sharp swings that might stoke inflation. Last week, Mr. Remolona said a 50-centavo move in someday is “a bit large.”
A trader said the peso may proceed its slide if no resolution is reached between the US and Iran, adding that the local unit could trade between P61 and P61.50 a dollar on Wednesday.
“There may be upside, but it surely hinges on a transparent Federal Reserve pivot, stable oil prices, and a return of portfolio flows,” Mr. Ravelas said.
“Until then, expect continued volatility and mild depreciation relatively than a sustained peso rebound.”