The Philippine peso remained pinned near historic lows on Thursday, highlighting how geopolitical tensions and rising global oil prices continue to weigh on the country’s currency outlook.
The local unit closed at P61.75 against the US dollar, unchanged from Wednesday’s finish and matching its weakest level since hitting the same mark in May. While the peso avoided further losses during the day’s trading, analysts said lingering concerns over global energy supply disruptions are keeping investors cautious.
The currency’s flat close reflects the delicate balance between external risks and domestic efforts to temper excessive foreign exchange volatility.
According to Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort, the peso continues to face pressure from the recent spike in global crude oil prices, which climbed to their highest levels in more than six weeks.
The renewed volatility in oil markets followed reports that Houthi forces targeted two Saudi Arabian oil tankers in the Red Sea, raising fears of a broader escalation of tensions in the Middle East. Any disruption in global oil supply poses a particular challenge for oil-importing economies such as the Philippines, which are vulnerable to rising import costs and inflationary pressures.
Higher oil prices typically increase the country’s dollar requirements for fuel imports, strengthening demand for the US currency and weakening the peso in the process.
“The peso remained unchanged and closed at its weakest level as global crude oil prices reached new one-and-a-half-month highs, which could potentially lead to larger supply disruptions if geopolitical tensions worsen,” Ricafort said.
Despite the downside risks, several domestic factors are helping prevent a sharper depreciation of the local currency.
The Bangko Sentral ng Pilipinas (BSP) has recently reminded banks to refrain from using foreign exchange derivatives transactions for speculative gains arising from currency movements. The move is intended to discourage excessive market speculation that could further amplify volatility in the foreign exchange market.
Malacañang has also reiterated that the BSP remains the country’s primary institution responsible for maintaining orderly foreign exchange markets and addressing excessive swings in the peso.
These policy signals have provided some reassurance to market participants that authorities remain prepared to respond should currency volatility become disruptive.
Trading activity on Thursday reflected the market’s cautious stance. The peso opened at P61.74 per dollar before briefly touching an intraday low of P61.75 and a high of P61.72, showing little movement throughout the session.
Economists note that the peso’s direction in the coming weeks will likely depend less on domestic fundamentals and more on developments abroad—particularly geopolitical tensions affecting global energy markets and the trajectory of the US dollar.
For now, the Philippine currency appears to be caught between rising external pressures and domestic policy measures aimed at keeping volatility in check.
With oil prices remaining highly sensitive to geopolitical developments, the peso may continue to trade near its weakest levels until greater clarity emerges in global markets.