PHILIPPINE PESO CLOSES AT P60.10 PER DOLLAR — A RECORD LOW FOR THE FIRST TIME IN HISTORY

P60.10 to the dollar.

That is what the peso closed at on March 19, 2026 — the first time in Philippine history the currency has ever finished a trading session beyond the P60 mark.

The intraday low touched P60.40 before pulling back. Dollar turnover for the session reached $2.437 billion, significantly heavier than the $1.78 billion transacted the day before. The previous closing record was P59.87, set just three trading days earlier on March 16.

TWO FORCES CAME TOGETHER ON MARCH 19

Iran launched retaliatory attacks on Israel and US assets in the Middle East on March 19, targeting energy infrastructure in the region. Brent crude climbed roughly 5% on the session, settling above $108 per barrel.

At the same time, the US Federal Reserve had just concluded its two-day policy meeting the night before and kept interest rates unchanged — but Fed Chair Jerome Powell's tone was more cautious than markets expected. Fourteen of 19 FOMC members projected zero or only one rate cut for all of 2026. The Fed's own inflation forecast was revised upward from 2.4% to 2.7% for the year.

Markets read this as rates staying higher for longer, and the dollar strengthened broadly.

The Philippines was already vulnerable. The BSP cut rates by 25 basis points in February, bringing the benchmark to 4.25%. That compressed the interest rate differential with the US to roughly 50 basis points — and reduced the peso's relative yield appeal.

THE PHILIPPINES FELT IT MORE THAN ITS NEIGHBORS

The Philippines imports more than 90% of its crude oil, and nearly all of it transits through the Strait of Hormuz.

When Iran's new supreme leader Mojtaba Khamenei vowed to keep the strait closed and threatened energy targets in Saudi Arabia, the UAE, and Qatar, the Philippines was not watching a geopolitical crisis from a distance. It was watching its fuel supply chain come under direct threat.

Jeremy Zook, Fitch Ratings' senior director for Asia-Pacific sovereign ratings, put it plainly: the Philippines is "probably one of the more exposed in terms of potential economic impact in the APAC region."

Diesel prices at the pump have exceeded P100 per liter. Since the start of 2026, gasoline has risen P6.70 per liter, diesel more than P9, and kerosene P7.70. Transport groups staged a two-day strike that ended March 20, with traditional jeepney drivers reporting they were spending around P3,600 per day on fuel and taking home as little as P200 to P300 after 12 to 18 hours of work.

THE BSP, THE APRIL 23 MEETING, AND THE RATE QUESTION

BSP Governor Eli Remolona Jr. said the central bank intervenes to smooth excessive volatility — not to defend any specific level.

But he had already flagged the risk: sustained oil prices above $100 per barrel may force a rate increase. Finance Secretary Frederick Go, who also sits on the Monetary Board, was more direct — if oil prices stay elevated, the Board will "most likely" consider tightening at its April 23 meeting.

Capital Economics revised its 2026 GDP growth forecast for the Philippines from 4.5% down to 3.8%, and now expects the BSP to hold rates rather than cut further. BPI senior vice president and lead economist Emilio Neri Jr. sketched out the harder scenario: if the war stretches for six months and oil pressure does not ease, the BSP may need to raise rates by as much as 125 basis points, bringing the benchmark to 5.5%.

MUFG senior currency analyst Michael Wan said the peso could depreciate to P61 per dollar if the Middle East conflict persists.

Fitch has maintained a "stable" outlook on the Philippines' BBB rating, but warned that a prolonged conflict would bring "negative rating pressures." Finance Secretary Go acknowledged the situation "poses a challenge" to the Philippines' goal of achieving an A rating from major credit agencies.

WHERE THE PESO GOES FROM HERE

DEPDev Secretary Arsenio Balisacan projected that if crude oil reaches $140 per barrel, full-year 2026 inflation could run as high as 7.5%. Under the $100-per-barrel scenario, inflation still comes out around 5.1% for the year.

The peso had weakened more than 4% just in March alone. Over the past twelve months, it is down roughly 4.73%.

The BSP intervened during the March 19 session — traders noted it may have kept the close from being worse. But whether intervention can hold the line in the weeks ahead depends almost entirely on how the Middle East situation develops.

If the Strait of Hormuz stays closed and oil prices keep climbing...