Full Breakdown
Peso Hits Record Low Amid Middle East Oil Crisis
3/10/2026, 2:14:12 AM
Currency and Stock Market Decline
The Philippine peso has fallen to a record low of 59.5 per dollar, marking a significant decline attributed to the ongoing crisis in the Middle East, which has caused oil prices to surge. On Monday, the peso's value dropped by 50 centavos from its previous close, surpassing the earlier low of 59.46 set on January 15. The currency even reached an intraday low of 59.71 during trading, with a trading volume of $2.6 billion, up from $1.8 billion in the previous session. Analysts warn that if tensions persist and the Strait of Hormuz remains closed, the peso could weaken further, potentially reaching between 60 and 61 per dollar.
The Philippine Stock Exchange Index (PSEi) also experienced a sharp decline, falling 4.97 percent or 314.19 points to close at 6,006.22. This drop is the largest one-day percentage decrease since April 7, 2025, when the index fell amid global recession fears. Michael Ricafort, chief economist at Rizal Commercial Banking Corp, noted that the PSEi could continue to slide if it fails to maintain levels above 6,000.
Economic Implications of Rising Oil Prices
The surge in oil prices, which briefly approached $120 per barrel, is expected to have significant economic repercussions for the Philippines. Michael Wan, a senior currency analyst at MUFG, indicated that the current crisis could lead to stagflation, characterized by high inflation and weak economic growth. Each $10 increase in oil prices is estimated to reduce GDP growth by 0.2 percentage points while raising inflation by approximately 0.6 percentage points.
Nicholas Mapa, chief economist at Metrobank, stated that the Bangko Sentral ng Pilipinas (BSP) may need to abandon its easing cycle due to rising inflation driven by higher oil prices. The BSP's current key policy rate stands at 4.25 percent, a three-year low, aimed at supporting a sluggish economy. However, Mapa warned that if oil prices continue to rise, the BSP may be forced to raise interest rates to combat inflation.
Criticism and Market Sentiment
Market sentiment has turned cautious, with investors wary of the potential economic fallout from escalating energy prices and a weakening peso. Wendy Estacio-Cruz, head of research at Unicapital Securities, highlighted that the last significant drop in the PSEi occurred when it fell below the 6,000 mark in late September 2025. The current market environment is described as "risk-off," with investors retreating from equities in light of the uncertain economic outlook.
Official Statements and Responses
BSP Governor Eli Remolona Jr. has acknowledged the challenges posed by rising inflation and slowing economic growth. He indicated that the central bank's focus may shift back to securing price stability if global oil prices reach $100 per barrel and the US dollar continues to strengthen.
Verbatim Quotes
- “It could be expected that the foreign exchange rate could be tested near the 60-level,” — Trader
- “Ozkardeskaya noted that sustained high energy prices could revive global inflation pressures and weigh on economic growth, developments that tend to dampen investor appetite for equities.” — Ipek Ozkardeskaya, Senior Analyst, Swissquote
The ongoing crisis in the Middle East continues to exert pressure on the Philippine economy, with implications for both the peso and the stock market as investors navigate a volatile landscape.
