Philippine Peso Gains as BSP Signals End of Cuts

The Philippine peso weakened to around 60.2 per USD, setting a fresh all-time low after the central bank held interest rates steady in an off-cycle meeting but signaled it may delay further tightening despite rising inflation risks. The Bangko Sentral ng Pilipinas kept its policy rate at 4.25% in an unscheduled meeting, warning that inflation could exceed the 4% ceiling in the near term due to supply-side pressures. However, policymakers stressed that aggressive rate hikes may have limited impact and could weigh on the still-fragile economic recovery, prompting a cautious stance. Earlier this week, President Marcos already declared a national energy emergency, citing an imminent threat to energy supply and the need for urgent measures to safeguard the economy and essential services. The Philippines, which relies almost entirely on Middle East oil imports and had just 45 days of supply as of March 20, is among the first countries to formally declare such an emergency.

The Philippine peso hovered around 60 per dollar, near its record low, as elevated oil prices and supply disruptions in the Middle East weighed on the economy. President Ferdinand Marcos Jr. declared a national energy emergency, citing an imminent threat to energy supply and the need for urgent measures to safeguard the economy and essential services.The Philippines, which relies almost entirely on Middle East oil imports and had just 45 days of supply as of March 20, is among the first countries to formally declare such an emergency. Pump prices have more than doubled since the war began, raising inflationary pressures and weighing on economic growth. Meanwhile, the central bank has limited interventions to temper currency volatility rather than defend a specific level. The peso has now fallen over 4% this month, ranking among Asia’s worst-performing currencies.

The Philippine peso weakened to around 60.2 per dollar, marking a new record low, as escalating Middle East tensions and rising oil prices pressured the currency. Threats of strikes on energy infrastructure in the Gulf and broader geopolitical risk fueled safe-haven demand for the US dollar, while foreign selling of local assets added to the decline. The peso has dropped 4.2% this month, ranking among Asia’s worst-performing currencies. The country’s heavy reliance on energy imports and a persistent trade deficit amplify vulnerability, while broader risk-off sentiment across Asian markets adds to pressure. Meanwhile, the BSP has limited interventions to temper volatility rather than defend a specific level, and prolonged oil above $100/barrel could force a policy pivot. Fiscal strains are rising, with higher borrowing costs highlighting the need for reforms and measures to support energy security and domestic demand.