Peso nears P62 against US dollar

By Aaron Michael C. Sy, Reporter

THE Philippine peso weakened against the dollar on Wednesday after touching a fresh intraday record low near the P62 level as escalating tensions in the Middle East heightened inflation and interest rate concerns.

The currency slipped by three centavos to close at P61.815 versus the greenback from its P61.785 finish on Tuesday, data from the Bankers Association of the Philippines’ website showed.

This was the peso’s lowest close in more than three weeks or since its record-low finish of P61.847 on July 24.

Year to date, the peso has depreciated by P2.995 or 4.85% from its P58.79-finish on Dec. 29, 2025.

The local unit opened Wednesday’s session sharply weaker at P61.85 per dollar and reached an intraday low of P61.995, surpassing its previous lowest level of P61.85 also on July 24.

Its intraday best was at P61.73 against the greenback.

Dollars exchanged rose to $1.888 billion from $1.336 billion previously.

“The peso reached near the P62-level on safe-haven demand after the  60-day MoU (memorandum of understanding) between the US and Iran expired, which triggered renewed market concerns,” a trader said in a Viber message.

Reuters reported that US President Donald Trump on Tuesday said no talks were taking place with Iran and insisted the Strait of Hormuz was open, contradicting Iran’s assertion that it remained shut to shipping.

The receding prospects of a deal to end the nearly six-month conflict drove up oil prices again on Tuesday, while stock markets sagged and borrowing costs for major economies including the US hit multi-decade highs, amid concerns about the long-term inflationary and fiscal impact of the crisis.

The US dollar was also generally stronger on Wednesday as investors positioned ahead of the release of the minutes of the US Federal Reserve’s last policy meeting, Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said in a Viber message.

Mr. Ravelas noted the US dollar remains the world’s preferred safe-haven currency.

“The peso’s weakness is largely externally driven, reflecting higher oil prices, heightened geopolitical tensions, and broad US dollar strength. As a major oil importer, the Philippines faces increased demand for dollars when energy prices rise,” Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

The Philippines is a net oil and gas importer, with 98% of its oil imports sourced from the Middle East.

The trader said the Bangko Sentral ng Pilipinas (BSP) could intervene when the local unit hits the P62 per dollar level, but noted this is not yet imminent due to still high uncertainty ahead of the BSP’s policy decision next week.

Meanwhile, Mr. Asuncion said the BSP is likely to intervene only to smoothen excessive volatility.

“While peso depreciation may add to inflation risks through higher import costs, the BSP is likely to remain focused on inflation and market stability, with FX intervention aimed at smoothing excessive volatility rather than defending a specific exchange-rate level,” he said.

BSP Governor Eli M. Remolona, Jr. has said the central bank only intervenes in the foreign exchange market to prevent inflationary swings rather than defend a specific level.

Analysts said the peso’s sharp decline could prompt the BSP to increase borrowing costs for a third time this year.

“The weaker peso definitely adds to inflationary pressure. I guess that is something to consider for BSP in next week’s policy meeting. It looks like the pros for a measured 25-bp (basis-point) rate hike currently outweigh the cons,” a second trader said in a text message.

Mr. Ravelas said a 25-bp hike next week could be a “good defense” against the dollar.

A third trader said in a Viber message that signals of a rate hike by the BSP could support the local unit.

Mr. Remolona last week signaled a less aggressive monetary stance following weaker-than-expected second quarter-economic growth, but noted they need to see a clearer and more sustainable slowdown in inflation.

Since April, the Monetary Board has raised rates by 50 bps through two consecutive 25-bp hikes in April and June to bring the policy rate to 4.75%. Its next review is on Aug. 27.

For Thursday, the third trader sees the peso moving between P61.65 and P61.90 against the dollar, while Mr. Ricafort expects it to range from P61.75 to P61.95. — with Reuters