By Aaron Michael C. Sy, A reporter
The PESO fell sharply on Tuesday, breaching the P61 mark against the dollar. For the first time in history, inflation worries as Global oil prices rose again after peace talks between the United States and Iran reached a deadlock.
The currency closed at P61.30 to the dollar, down 59 cents from Monday’s close of P60.71, according to Bankers Association of the Philippines data posted on its website.
This surpassed the previous closing low of P60.748 entered on March 31. This is now also the worst level ever hit by the peso, beating P60.84 recorded on March 30.
Year to date, the peso has weakened by P2.51 or 4.09% from its close of P58.79 on Dec. 29, 2025.
Tuesday’s drop was also its biggest one-day drop in seven months or since it fell 63.9 centavos on September 25, 2025.
The peso opened Tuesday’s trading session weaker at P60.80 against the greenback. Its intraday high was at P60.77, while its worst showing was its closing level of P61.30.
Sales dollars jumped to $1.75 billion from $1.41 billion in the previous period.
The weakness of the peso continued to be driven by the closure of the Strait of Hormuz due to the US-Iran conflict, which increased oil prices worldwide, said HSBC Senior ASEAN (Association of Southeast Asian Nations) economist Aris D. Dacanay in a press conference on Tuesday.
“I don’t think it’s peso-driven. I think it’s dollar-driven. And you can see that in the devaluation of all other currencies.”
Strong demand for dollars among importers may have led to Tuesday’s decline, said Robert Dan J. Roces, an economist at SM Investments Corp., in a Viber message.
“Going above P61 doesn’t mean that the BSP (Bangko Sentral ng Pilipinas) hike failed. It helped, but stronger forces are at work. US rates are still high, the dollar is strong, and money is flowing out of emerging markets,” he said.
“The market is looking at where rates are headed, not just the last move, and may still see a small gap with the US. The peso’s weakness is largely driven by global factors, and the rise is likely to delay the decline rather than reverse it.”
On Tuesday, Brent crude rose 2.7% to $111.20 a barrel, a three-week high, while US crude rose 2.9% to $99.10, Reuters reported.
The US has been reviewing Tehran’s latest proposal to end the war, even as the USficial said President Donald J. Trump is unhappy with the plan as it does not address Iran’s nuclear program.
That leaves the two-month conflict over power and other resources through the sensitive Strait of Hormuz still closed.
The Philippines is a net exporter of oil, receiving most of its supplies from the Middle East and making it highly vulnerable to global price shocks.
Higher fuel costs due to the ongoing war have threatened the domestic inflation situation, prompting the BSP Monetary Board to raise interest rates by 25 basis points last week. This was the first increase in two years.
BSP Governor Eli M. Remolona, Jr. also left the door open for further tightening with a “sequential rate hike” as they try to end price hikes.
This, as the central bank now expects core inflation to exceed the 2%-4% tolerance until next year. It increased inflation forecasts to 6.3% in 2026 and 4.3% in 2027. from 5.1% and 3.8% previously.
Inflation already breached the target in March, hitting a two-year high of 4.1% and bringing the three-month average to 2.8%.
The peso’s devaluation past the P61 mark “keeps foreign inflation risks alive – fuel, food, and energy costs are rising – so the BSP’s hawkish bias remains strong and devaluation is hard to justify,” said Reyes Tacandong & Co. Senior Counsel Jonathan L. Ravelas in a Viber message.
“From the market’s perspective, the new record dampens sentiment and raises risk premiums, while growth picks up pace as inflation pressures consumers and tight financial conditions deter investment.”
Meanwhile, Mr. Dacanay said peso inflation may not be so strong at the moment as this drop was widely expected, even before the Iran war started.
“So, all the prices we see now have already devalued the peso to reach P61 a dollar… So, right now, I don’t think there is muchinflationary effect, except for those that follow closely, such as fuel and electricity.”
The BSP said it only intervenes in the foreign exchange market to prevent sharp fluctuations that could increase inflation. Last week, Mr. Remolona said the 50-centavo move in one day is “a little big.”
The trader said the peso may continue to slide if no resolution is reached between the US and Iran, adding that the local currency could trade between P61 and P61.50 per dollar on Wednesday.
“There is upside, but it depends on a clear Federal Reserve pivot, stable oil prices, and a return to portfolio flows,” Mr Ravelas said.
“Until then, expect continued volatility and mild devaluation instead of continued peso appreciation.”
