Full Breakdown
Philippine Peso Hits Record Low Amid Middle East Conflict
3/14/2026, 8:33:48 AM
Peso Declines Due to Geopolitical Tensions
The Philippine peso has reached a record low against the US dollar, closing at 59.735 on Friday, marking a decline of 35 centavos from the previous day. This drop follows a week of volatility driven by fears of a prolonged conflict in the Middle East, particularly after the United States and Israel engaged in military actions against Iran. The peso's intraday low of 59.75 surpassed its previous record of 59.71, reflecting heightened investor anxiety over rising oil prices and geopolitical instability. The Strait of Hormuz, a critical passage for global oil transport, has been threatened by Iranian leadership, which has vowed to keep it closed and continue attacks on neighboring countries.
Impact on Global Markets and Local Economy
The ongoing conflict has led to a surge in oil prices, which have risen above $100 per barrel, further straining energy-importing economies like the Philippines. The increased oil prices have prompted investors to seek safety in the US dollar, exacerbating the peso's decline. Trading volumes surged to $2.2 billion, indicating heightened market activity as traders reacted to the evolving situation. Economists have noted that the current geopolitical tensions serve as a "stress test for Asia's energy resilience," highlighting the urgent need for energy transition and diversification in the region.
Official Responses and Economic Projections
The Bangko Sentral ng Pilipinas (BSP) has indicated that it may intervene to stabilize the peso if its decline becomes disorderly, particularly around the 60-peso mark. BSP Governor Eli Remolona Jr. has warned that the central bank could reverse its recent interest rate cuts if oil prices remain elevated for an extended period. Analysts from ANZ Research have expressed concerns that current policy measures may only provide short-term stability without addressing underlying structural risks.
Criticism of Policy Responses
Critics argue that while immediate measures are being taken to mitigate the impact of rising oil prices, they do not adequately address the long-term challenges posed by energy supply disruptions. Jonathan Ravelas, a senior adviser at Reyes Tacandong & Co., anticipates continued pressure on the peso, projecting it will trade within the 59.60 to 59.90 range in the near term.
Conflicting Reports on Market Reactions
As the conflict continues, there are mixed reports regarding the overall impact on global markets. While oil prices dipped slightly below $100, they remain significantly higher than pre-conflict levels, and analysts caution that the situation could worsen if the conflict escalates further. Major central banks are expected to reassess their interest rate strategies in light of the ongoing crisis, with some analysts predicting a freeze or increase in rates to combat inflation.
Verbatim Quotes
- “In the near term, the peso may trade with volatility, its movements driven mainly by oil prices, global dollar strength and geopolitical developments,” — Trader
- “Current policy actions address short-term stability but not structural risk,” — Economists at ANZ Research
- “Near term, the currency is expected to trade within the 59.60 to 59.90 range, with downside support around 59.60 and resistance near 59.90,” — Jonathan Ravelas, Senior Adviser at Reyes Tacandong & Co.
