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The Philippine peso is nearing the edge of the psychological P60-per-dollar mark as the escalating conflict between the United States and Iran drives global oil prices to multi-year highs. The rapid depreciation has prompted immediate intervention from the country’s monetary authorities.
Central Bank Steps In
On Monday, the local currency weakened by as much as 0.3% to trade at P59.94 against the greenback, nearing a new record low. This intraday drop followed a week of sustained pressure where the peso closed at a record low of P59.735 on Friday, depreciating 73.5 centavos week-on-week.
The movement prompted the Bangko Sentral ng Pilipinas (BSP) to step in to support the currency. BSP Governor Eli Remolona Jr. confirmed the central bank’s active intervention in the foreign-exchange market.
“Since the dollar is down, I assume some intervention can push the peso back down below 60,” Remolona stated.
The Catalyst: Geopolitics and Surging Oil
The primary driver of the peso’s weakness is the Philippines’ heavy reliance on imported fuel, which makes the local economy highly vulnerable to global energy shocks.
Global markets are currently bracing for supply disruptions due to the intensifying US-Iran conflict. Brent crude has surged past the $100 threshold for the first time since August 2022, trading between $103.14 and $104 per barrel. Meanwhile, West Texas Intermediate (WTI) crude futures rose to settle at $98.71 per barrel.
Investors are also flocking to the safety of the US dollar amid the geopolitical uncertainty and expectations that the US Federal Reserve may delay interest rate cuts due to energy-driven inflation risks.
The Key P60 Threshold
The P60 level is viewed as a critical psychological and political barrier. In January, the press office of President Ferdinand Marcos Jr. explicitly stated that the administration does not want the peso to breach the 60-per-dollar mark.
However, prior to the recent escalation in the Middle East, Governor Remolona had signaled that the BSP could “probably” allow the currency to reach that level, provided there were no sharp or disruptive market moves.
With oil prices now persistently elevated, the central bank’s policy approach may shift. Remolona previously noted in a March 6 interview that oil prices remaining above $100 a barrel could trigger a rate hike from the BSP.
Disclosure: AI is used to assist in developing this article.
This article is published on BitPinas: Philippine Peso Nears P60 Per Dollar Amid US-Iran Conflict; Central Bank Intervenes
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