Peso moves closer to P57 level as Iran-Israel conflict continues
THE PESO dropped against the dollar for a seventh straight session on Wednesday to close near the P57 level as market sentiment stayed gloomy with the conflict between Iran and Israel showing no signs of easing.
The local unit closed at P56.98 versus the greenback on Wednesday, dropping by 28 centavos from its P56.70 finish on Tuesday, Bankers Association of the Philippines data showed.
This was the local unit’s weakest finish in over two months or since it closed at P57.08 on April 14.
The peso has now lost P1.235 since the start of June following its May 30 finish of P55.745.
Year to date, the peso is still up by 1.51% from its end-2024 close of P57.845.
The peso opened Wednesday’s session weaker at P56.75 against the dollar. Its intraday best was at P56.70, while its worst showing was its closing level of P56.98 versus the greenback.
Dollars traded went up to $1.27 billion on Wednesday from $1.203 billion on Tuesday.
The Philippines will tolerate the slide in its currency to a two-month low, with the central bank governor flagging that interventions won’t be effective in the face of global risk aversion, Bloomberg reported.
“It’s futile to intervene when it’s a strong dollar story driven by safe-haven flows,” Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. said in a mobile-phone message on Wednesday.
Asian currencies have dropped against the dollar this week as an escalating conflict between Iran and Israel hurt sentiment. With the hostilities triggering a rise in the price of oil, the currencies of import-reliant countries such as the Philippines and India have been particularly affected.
“The dollar-peso closed higher due to escalating tensions in the Middle East,” a trader said in a phone interview.
The peso extended its losing streak amid safe-haven demand for the dollar and the recent climb in oil prices due to the Iran-Israel conflict, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
ING Bank said in a research note on Wednesday that higher oil prices could have a “more damaging impact” on the Philippines and could put more pressure on the peso.
“The country has the largest current account deficit in the region, driven by rising imports and softer remittance growth, making it highly vulnerable to oil price shocks. A 10% rise in oil prices could widen its deficit by roughly 0.25% of GDP (gross domestic product), which stood at an elevated 3.7% of GDP in the first quarter of 2025, pressuring the PHP in the near term,” it said.
For Thursday, the trader expects the peso to move between P56.70 and P57.10 per dollar, while Mr. Ricafort sees it ranging from P56.90 to P57.10. — A.M.C. Sy with Bloomberg
