19.08.202602:40:59UTC+00Philippine Peso Hits New All-Time Low

The Philippine peso weakened beyond 61.8 per US dollar, setting a new all-time low as rising oil prices renewed pressure on the currency. It broke through the previous record low of 61.850 recorded in July, amid a more than 5% jump in Brent crude over the past four days driven by renewed tensions in the Middle East and mounting concerns over energy supplies.

The Philippines is especially vulnerable to higher oil prices because it imports nearly all of its oil requirements, heightening the risk of stronger inflationary pressures. In response, the Bangko Sentral ng Pilipinas has raised its policy rate to 4.75% and intervened in the foreign-exchange market. However, sustained gains in oil prices and elevated global bond yields are likely to keep the peso under pressure.

President Ferdinand Marcos Jr. has also signaled that the government will not exhaust the country’s foreign-exchange reserves to defend the currency. The peso has now depreciated by more than 5% since the start of the year, making it one of Asia’s weakest performers, while foreign-exchange reserves have declined by nearly 7% to $103 billion.