Peso hits new record low as war risks spook traders

The peso on Tuesday ended at a new all-time low for the eighth time this month as the widening Middle East war caused investors to flock to the safe-haven dollar as oil supply risks threaten to push up inflation.

The local unit fell by 5.8 centavos to close at PHP 60.748 against the greenback from its previous record-low PHP 60.69 finish on Monday, data from the Bankers Association of the Philippines showed.

The peso has ended at historic lows for the last three trading days. Tuesday’s close also marks its eighth record-low finish since the United States and Israel launched their attacks on Iran on Feb. 28.

Year to date, the peso has now depreciated by PHP 1.958 or 3.2232% from its PHP 58.79 finish on Dec. 29, 2025.

The currency opened Tuesday’s trading session slightly stronger at PHP 60.65. It climbed to an intraday best of PHP 60.58, while its weakest showing was at PHP 60.75 against the greenback.

Dollars traded went down to USD 1.587 billion from USD 2.007 billion on Monday.

“The pair closed higher at PHP 60.748 as the dollar remained well-bid amid escalating tensions in the Middle East, fueling safe-haven demand for the dollar,” the first trader said in a phone interview.

The peso slumped due to the latest rise in global oil prices, which threatens domestic inflation, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Philippines is a net importer of oil and Middle East crude accounts for roughly 98% of its imports.

The Bangko Sentral ng Pilipinas (BSP) said last week that it now expects headline inflation to average 5.1% this year as the Iran war continues to throttle global energy trade — well above its 2%-4% tolerance band. Annual inflation last breached the BSP’s target in 2023.

A second trader said in a Viber message that the peso’s slide to new records seems to be a knee-jerk reaction to the fast-changing situation in the Middle East and “not a new trend.”

“Higher crude oil prices widen the trade gap, and risk-off sentiment lifts the dollar. In the near term, we expect the peso to trade at PHP 60-61 while shocks persist. If oil stabilizes, the peso retraces.”

The first trader said the market remains cautious as the conflict remains a key source of volatility.

“For now, we’re looking at the possibility of testing the PHP 61 resistance as fuel prices continue to advance and in the absence of any resolution in the Middle East conflict,” the trader said.

“Everything is uncertain. We are still on a wait-and-see approach. But in the meantime, in the absence of any clear resolution to the oil crisis and the war, we expect the dollar to remain steady above the PHP 60 figure.”

For Wednesday, Mr. Ricafort sees the local unit ranging from PHP 60.60 to PHP 60.85 against the greenback.

The dollar headed for its biggest monthly gain since July on Tuesday and stands out as the strongest so-called safe asset, as war in the Middle East has set oil prices surging, nearly everything else sinking and raised the risk of global recession, Reuters reported.

Developed market currencies were broadly steady on the day, with the Japanese yen unchanged at JPY 159.62 per dollar, the euro flat at USD 1.1472 and the pound 0.14% higher at USD 1.3202.

But still all three were set for March falls of more than 2%. For the euro and pound, that is the largest drop since July, and since October for the yen.

The dollar has been supported by the US status as an energy exporter and by investors’ flight to cash over the past month of conflict.

The latest news from the war, including a Wall Street Journal report that US President Donald J. Trump was willing to end attacks on Iran without forcing open the Strait of Hormuz, did little for currencies on Tuesday, but did underscore their monthly moves.

Asian currencies have suffered some of the largest losses and, on Tuesday, the dollar pushed 1% higher against South Korea’s won to 1,534 won, levels touched only in the wake of the global financial crisis in 2009 and the Asian financial crisis in 1997 and 1998.

The dollar index, which tracks the unit against six main peers, touched its highest since last May at 100.64 and, last sitting at 100.47, is up 2.8% through March.

Also top of mind for currency markets were renewed threats of intervention from Tokyo, which served to spare extra selling pressure on the yen, currently at its weakest since July 2024. — Aaron Michael C. Sy with Reuters