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The Philippine peso fell to its lowest level in over a month on Friday, ending the week back at 59 against the US dollar as the greenback continued its upward trend amid escalating tensions in the Middle East.
Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. warned that the central bank could consider raising interest rates if crude oil prices reach $100 per barrel and the dollar continues to strengthen.
The local currency finished 37 centavos weaker than its previous close, marking its poorest performance since January 27, 2026, and halting a brief rally earlier this year.
In an interview with CNBC, Remolona said a surge in oil prices combined with sustained dollar strength could prompt decisive policy measures to prevent inflation from exceeding the BSP’s target.
He added that the recent oil and currency movements remain manageable for now, saying, “For now, where the price of oil is and where the dollar is, we don’t see the need for a rate hike. At some point, if the price of oil goes to, say, $100 a barrel and the dollar continues to strengthen, then we’d have to consider a rate hike.”
The Middle East conflict has disrupted oil shipments, particularly through the Strait of Hormuz, raising concerns about potential supply shocks for energy-importing countries such as the Philippines.
Domestic inflation had already climbed to 2.4 percent in February, a 13-month high, though it remained within the central bank’s 2- to 4-percent target range. The BSP’s key policy rate is set at a three-year low of 4.25 percent to support growth.
Economists noted that a sudden breach of the BSP’s inflation target is unlikely. Miguel Chanco of Pantheon Macroeconomics said the crisis does not appear to warrant an immediate shift in policy, while Deepali Bhargava of ING Bank added that measures like suspending fuel excise taxes could help contain price impacts and reduce the need for rate hikes.