Philippine Peso Weakens

The Philippine peso fell to 60.4 per USD, approaching a record low, as risk sentiment took a hit again following the collapse of US–Iran peace talks and US plans to blockade Iranian port traffic. The US forces said it would begin blockading all Iranian ports at 1400 GMT on Monday, while still allowing vessels not traveling to or from Iran to pass through the Strait of Hormuz. The conflict, which began in late February, has escalated into a broader regional confrontation, unsettling global markets and pushing oil prices higher. In an off-cycle meeting last month, the Bangko Sentral ng Pilipinas kept the rate at 4.25%, opting against tightening policy despite rising inflationary pressures stemming from the war, in order to support the economy’s fragile recovery from a recent graft scandal. Meanwhile, the latest data showed inflation accelerating to a 20-month high of 4.1% in March, breaching the BSP’s 2–4% target range and increasing the likelihood of a rate hike in the coming months.

The Philippine peso rose to 59.5 per USD, recovering from a record low reached on March 30, as risk sentiment improved following a two-week ceasefire agreement between the US and Iran in their monthlong conflict. President Trump agreed to refrain from attacking Iran for two weeks on the condition that Tehran reopens the Strait of Hormuz. Iran said that passage through the strait would be possible via coordination with its armed forces. The conflict, which erupted in late February, has escalated into a broader regional confrontation, unsettling global markets and driving up oil prices. In an unscheduled meeting last month, the Bangko Sentral ng Pilipinas held interest rates at 4.25%, opting not to tighten policy despite inflationary pressures from the war in order to protect the economy’s fragile recovery from a recent graft scandal. Meanwhile, latest data showed March inflation accelerated to a 20-month high of 4.1%, exceeding the BSP's target of 2-4%, raising the risk of a rate hike.

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.