Peso dives to record low; stocks tumble nearly 5%
The peso fell to a fresh record low while stocks plunged by nearly 5 percent on Monday as the oil shock caused by the worsening crisis in the Middle East rattled markets.
Analysts warned that the currency could weaken to as much as 61 to the dollar while stocks are poised to fall further if tensions in the Middle East persist and the Strait of Hormuz remains closed.
On Monday, the local currency ended trading at 59.5 per dollar, 50 centavos weaker than its previous close. The finish marked a new record low for the peso, surpassing the earlier low of 59.46 set on Jan. 15.
The peso also sank to an intraday low of 59.71, breaching the prior intraday record of 59.50. Trading volume was heavy, rising to $2.6 billion from $1.8 billion in the previous session.
A trader attributed the weakness to surging oil prices amid the prolonged conflict in Iran and parts of the Middle East.
Brent crude, the international benchmark, briefly spiked near $120 per barrel before paring some of its gains yesterday.
At home, diesel prices are expected to surge by as much as P24.25 per liter this week, though some oil companies have agreed to stagger the increases.
Higher oil prices could pressure the peso as they swell the Philippines’ import bill. The country sources more than 90 percent of its energy requirements from the Middle East.
The turmoil in the oil-rich region has also triggered a flight to safe-haven assets, boosting demand for the US dollar.
“It could be expected that the foreign exchange rate could be tested near the 60-level,” the trader said, adding that a disorderly slide of the peso could prompt a forceful intervention by the Bangko Sentral ng Pilipinas (BSP).
In a note to clients, Michael Wan, a senior currency analyst at MUFG’s Global Markets Research, said the latest crisis differs from previous oil price shocks.
Rather than simply driving up crude prices, the conflict risks triggering a broader energy shortage, Wan said, with the Philippines and much of Asia particularly vulnerable should the Strait of Hormuz remain shut for an extended period.
MUFG estimates the peso-dollar exchange rate could range between 59 and 60 in a scenario where oil prices rise to about $90 per barrel.
In a more pessimistic case—with crude climbing to $100 a barrel and the US dollar strengthening if the Federal Reserve delays further interest-rate cuts—the bank said the peso could hover between 60 and 61 per dollar.
Overall, Wan said the ultimate impact of the turmoil on the Philippines would be stagflation—a troubling mix of high inflation and weak economic growth.
MUFG estimates that every $10-per-barrel increase in oil prices would shave about 0.2 percentage point off gross domestic product growth while raising inflation by roughly 0.6 percentage point in the Philippines.
As for stocks, the benchmark Philippine Stock Exchange Index (PSEi) fell 4.97 percent or 314.19 points to close at 6,006.22.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the PSEi may slide further if it repeatedly falls below the 6,000 mark and struggles to sustain gains above that level.
Wendy Estacio-Cruz, head of research at Unicapital Securities, said the last time the PSEi had a comparably large one‑day percentage drop was on April 7, 2025, when it fell about 4.3 percent in a single session amid global recession fears.
“The PSEi last closed below the 6,000 level in late September 2025, when it briefly finished around 5,997.60,” Cruz said.
Philstocks financial research manager, Japhet Tantiangco said investors grew wary of the potential economic fallout from surging energy prices and a weakening peso.
In a market commentary, Ipek Ozkardeskaya, senior analyst at Swissquote, said crude oil briefly surged to $120 per barrel before settling above the $100-per-barrel level as fears of a prolonged Middle East conflict intensified.
Ozkardeskaya noted that sustained high energy prices could revive global inflation pressures and weigh on economic growth, developments that tend to dampen investor appetite for equities.
Back home, trading remained active despite the sharp decline. Net value turnover reached P9.76 billion, while foreign investors were net sellers with outflows amounting to P1.58 billion.
Losses were broad-based across sectors, with conglomerates posting the steepest drop of 5.94 percent, while the rest of the industry gauges also finished in the red.
Market breadth heavily favored decliners, which overwhelmed advancers 205 to 28.
All index members closed lower during the session. Century Pacific Food Inc. led the losses among blue chips, tumbling 11.11 percent to P32.00.
Looking ahead, Juan Paolo Colet, managing director at investment bank China Bank Capital Corp., said financial markets were now in full risk-off mode in the face of $100 oil and the prospect of a prolonged war in the Middle East.
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