THE Philippine peso experienced a historic plunge on Thursday, breaching the P60 to $1 mark for the first time as escalating conflict in the Middle East and a surge in global oil prices rattled financial markets.
The local currency closed at P60.10 to the US dollar, marking its weakest performance ever and surpassing the previous record low of P59.87 set on March 16, 2026.
The sharp depreciation of the peso is largely attributed to the heightened geopolitical tensions, particularly Iran’s threats to attack oil and gas targets in the Gulf region following an incident involving its Pars gas field.
This development sent Brent crude benchmark prices soaring by approximately 5% to over $108 per barrel. Iran has since issued warnings, identifying Saudi Arabia, the United Arab Emirates, and Qatar as potential targets, urging immediate evacuation of their oil and gas facilities.
Local economists have long cautioned about the adverse effects of rising global crude oil prices on the Philippine economy. Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., noted the peso’s reaction as a “knee-jerk reaction” to Iran’s potential retaliation, warning that sustained escalation could keep the exchange rate above P60.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., echoed these sentiments, linking the peso’s record low to the surge in global oil prices and cautious signals from the US Federal Reserve, which has maintained interest rates and is now pricing in a potential rate cut in late 2027.
The Department of Economy, Planning, and Development (DepDev) had previously warned that inflation could accelerate beyond 7% if the Middle East conflict persists and intensifies.
In response, the government is exploring the suspension of excise taxes on petroleum products, a move that could potentially reduce gasoline prices by P10 per liter and diesel by P6 per liter.
Meanwhile, the Bangko Sentral ng Pilipinas (BSP) reiterated its stance of not targeting a specific exchange rate level but intervening to curb excessive volatility and maintain orderly market conditions, consistent with its flexible exchange rate policy. Senator Joel Villanueva expressed hope for the peso’s resilience while acknowledging concerns about servicing dollar-denominated debt, urging timely measures from the BSP to ensure exchange rate stability.
Malacañang has previously indicated President Ferdinand “Bongbong” Marcos Jr.’s desire to prevent the peso from weakening past P60, citing its potential impact on the country’s debt obligations.
