AFTER the Philippine peso fell to a new record low of P62.86 against the dollar on Monday, a trader warned that the local currency could slump to as low as P64 against the greenback by the end of the year if oil prices, the dollar and geopolitical tensions remain elevated.
The trader pointed this out after the peso closed at P62.86 against the dollar on Monday.
Data from the Bankers Association of the Philippines (BAP) showed the rate is 18 centavos weaker than its P62.68 finish against the greenback on Friday.
The local currency also hit an all-time low of P62.875 in intraday trading on Monday.
Strong dollar, high oil prices, steady local dollar demand
Given these developments, a trader familiar with the matter explained that the peso is being pressured by a strong dollar, high oil prices and steady local dollar demand.
‘At P62.86, a test of P63 is now within striking distance, although sustaining levels above it is another matter given possible BSP smoothing,’ said the trader, who requested not to be named.
As such, he noted: ‘Seeing P62-P63 as a reasonable year-end range, with P64 as a downside risk if oil prices, the dollar and geopolitical tensions remain elevated.’
Oil prices jump after fresh attacks in the Middle East
For his part, Jonathan L. Ravelas, senior adviser at Reyes Tacandong and Co. attributed the weakening of the peso to 62.68 ‘as oil jumps as shutdown of Saudi pipeline further deepening the oil crisis.’
John Paolo R. Rivera, Senior Research Fellow at Philippine Institute for Development Studies (PIDS), also attributed the latest slump of the local currency to oil prices remaining above $100 per barrel ‘amid renewed Middle East tensions.’
Rivera also cited the expectations of tighter US monetary policy as one of the factors fueling the strength of the dollar.
The senior research fellow at the state think tank pointed out that these are particularly ‘significant’ for the Philippines as an oil importer, since higher oil prices increase the country’s dollar requirements and import bill.
Both Ravelas and Rivera expect the local currency to remain under pressure and volatile in the near term.
Ravelas said he expects the peso trade within the 62.60 to 63.00 range against the greenback in the near term.
Rivera said, however, that the key is not the record low level itself ‘but whether depreciation becomes persistent and disorderly enough to generate additional inflationary pressures.’
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corporation (RCBC), said Brent crude oil price rose to $107 per barrel on September 14 after Saudi Arabia ‘closed its East-West pipeline which bypasses the Strait of Hormuz after multiple attacks on Thursday as a precautionary measure.’
‘Saudi Arabia’s oil exports slumped to just about 3 million barrels a day in August 2026, the lowest in records going back to early 2017, as ships came under attack in the Red Sea from Houthi militants,’ added Ricafort.
Within the month of September alone, this is the sixth time the local currency plunged to a fresh all-time low finish.