The Philippine peso (PHP) slumped on Tuesday, closing near its record low against the US dollar (USD) as intensifying conflict in the Middle East pushed global oil prices to $88 per barrel. This renewed fears of higher inflation and potential interest rate hikes, driving safe-haven demand for the dollar. The peso dropped by 5.9 centavos to close at P61.745 per USD, its worst close in nearly two months since June 1, and nearly matching its all-time intraday low of P61.75.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort noted that the peso's decline was due to the recent climb in global crude oil prices. The currency opened Tuesday at P61.69 against the greenback, hit a high of P61.68, and a trough of P61.75. Dollars exchanged increased to $752.5 million from $670.5 million the previous day, indicating heightened market activity. Analysts predict continued pressure on the peso, with forecasts ranging from P61.50 to P62 for Wednesday.
In a related development on Monday, the peso also depreciated against the dollar, ending a three-day climb as Middle East war tensions buoyed crude oil prices and created fresh inflation risks. It declined by 9.9 centavos to close at P61.686 per dollar. While the peso is under pressure from rising oil prices, Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. has indicated that the central bank periodically intervenes in the foreign exchange market to prevent sharp, inflationary swings, suggesting potential intervention to cushion the peso's fall as it nears critical levels.
