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A customer swaps US dollars for pesos at a foreign exchange outlet in Manila.
STAR / File
MANILA, Philippines — The Philippine peso slumped to a new record low on Monday, March 16, closing at P59.87 per US dollar, as ongoing tensions between the United States, Israel, and Iran continue to strain global fuel supplies and weigh on economic conditions in the Philippines.
According to the Bankers Association of the Philippines, Monday's trading saw the Philippine peso open at P59.71, dip to a low of P59.95 — just 5 centavos short of P60 per US dollar — and close at P59.87.
The Philippine peso weakened by 13.5 centavos against the US dollar, slipping further from its previous record low of P59.735 on March 13.
Since the country buys oil products in US dollars, a weaker peso makes fuel imports more expensive, especially as the cost per barrel has already exceeded $100 and triggered double-digit spikes in domestic fuel prices.
In a March 9 report, Mitsubishi UFJ Financial Group projected that the peso could even fall past P60 if Middle East tensions continue and the Strait of Hormuz remains closed. It, however, also warned of an energy shortage, considering 95% of the crude oil that the Philippines imports comes from the Middle East.
The industry expert also explained that oil prices and US interest rates influence the peso's exchange rate. MUFJ Group estimates that for every $10 increase in oil prices adds 0.4-0.5% of the gross domestic product to the Philippines' current account deficit, which simply means the country spends more than it earns.
After the Philippine peso first fell past P59 in January, Bangko Sentral ng Pilipinas Governor said the central bank would not take major action if the peso reached P60 or P61 per dollar.
However, amid tensions in the Middle East, industry experts are saying the central bank could consider raising interest rates to help strengthen the peso.
