Peso hits new record low as war risks spook traders

The peso on Tuesday ended at a new all-time low for the eighth time this month as the widening Middle East war caused investors to flock to the safe-haven dollar as oil supply risks threaten to push up inflation.

The local unit fell by 5.8 centavos to close at PHP 60.748 against the greenback from its previous record-low PHP 60.69 finish on Monday, data from the Bankers Association of the Philippines showed.

The peso has ended at historic lows for the last three trading days. Tuesday’s close also marks its eighth record-low finish since the United States and Israel launched their attacks on Iran on Feb. 28.

Year to date, the peso has now depreciated by PHP 1.958 or 3.2232% from its PHP 58.79 finish on Dec. 29, 2025.

The currency opened Tuesday’s trading session slightly stronger at PHP 60.65. It climbed to an intraday best of PHP 60.58, while its weakest showing was at PHP 60.75 against the greenback.

Dollars traded went down to USD 1.587 billion from USD 2.007 billion on Monday.

“The pair closed higher at PHP 60.748 as the dollar remained well-bid amid escalating tensions in the Middle East, fueling safe-haven demand for the dollar,” the first trader said in a phone interview.

The peso slumped due to the latest rise in global oil prices, which threatens domestic inflation, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Philippines is a net importer of oil and Middle East crude accounts for roughly 98% of its imports.

The Bangko Sentral ng Pilipinas (BSP) said last week that it now expects headline inflation to average 5.1% this year as the Iran war continues to throttle global energy trade — well above its 2%-4% tolerance band. Annual inflation last breached the BSP’s target in 2023.

A second trader said in a Viber message that the peso’s slide to new records seems to be a knee-jerk reaction to the fast-changing situation in the Middle East and “not a new trend.”

“Higher crude oil prices widen the trade gap, and risk-off sentiment lifts the dollar. In the near term, we expect the peso to trade at PHP 60-61 while shocks persist. If oil stabilizes, the peso retraces.”

The first trader said the market remains cautious as the conflict remains a key source of volatility.

“For now, we’re looking at the possibility of testing the PHP 61 resistance as fuel prices continue to advance and in the absence of any resolution in the Middle East conflict,” the trader said.

“Everything is uncertain. We are still on a wait-and-see approach. But in the meantime, in the absence of any clear resolution to the oil crisis and the war, we expect the dollar to remain steady above the PHP 60 figure.”

For Wednesday, Mr. Ricafort sees the local unit ranging from PHP 60.60 to PHP 60.85 against the greenback.

The dollar headed for its biggest monthly gain since July on Tuesday and stands out as the strongest so-called safe asset, as war in the Middle East has set oil prices surging, nearly everything else sinking and raised the risk of global recession, Reuters reported.

Developed market currencies were broadly steady on the day, with the Japanese yen unchanged at JPY 159.62 per dollar, the euro flat at USD 1.1472 and the pound 0.14% higher at USD 1.3202.

But still all three were set for March falls of more than 2%. For the euro and pound, that is the largest drop since July, and since October for the yen.

The dollar has been supported by the US status as an energy exporter and by investors’ flight to cash over the past month of conflict.

The latest news from the war, including a Wall Street Journal report that US President Donald J. Trump was willing to end attacks on Iran without forcing open the Strait of Hormuz, did little for currencies on Tuesday, but did underscore their monthly moves.

Asian currencies have suffered some of the largest losses and, on Tuesday, the dollar pushed 1% higher against South Korea’s won to 1,534 won, levels touched only in the wake of the global financial crisis in 2009 and the Asian financial crisis in 1997 and 1998.

The dollar index, which tracks the unit against six main peers, touched its highest since last May at 100.64 and, last sitting at 100.47, is up 2.8% through March.

Also top of mind for currency markets were renewed threats of intervention from Tokyo, which served to spare extra selling pressure on the yen, currently at its weakest since July 2024. — Aaron Michael C. Sy with Reuters

Bargain hunting lifts stocks as Iran war continues

Philippine shares rebounded on Tuesday as investors picked up cheap names following a three-day slump and amid news of government efforts to reduce war-related oil trade disruptions.

The benchmark Philippine Stock Exchange index (PSEi) rose by 1.35% or 79.45 points to close at 5,948.94, while the broader all shares index went up by 1.15% or 38.07 points to end at 3,333.92.

“The market witnessed a strong rebound, bucking the regional slide despite intensifying conflict within the Middle East,” AP Securities, Inc. said in a market note.

“The local market rose upon news that the government is planning to pursue talks with Iran for safe passage of Philippine-bound vessels through the Strait of Hormuz. The news caused investors to hunt for bargains,” Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message.

President Ferdinand R. Marcos, Jr. has instructed Foreign Affairs Secretary Maria Theresa P. Lazaro to begin discussions with Iran’s ambassador to the Philippines to secure safe passage for Philippine-bound vessels through the Strait of Hormuz, Palace Press Officer Clarissa A. Castro told a briefing on Tuesday.

The Strait of Hormuz, which carries about a fifth of the world’s oil shipments, has been shut due to an Iranian blockade as its war with the United States and Israel rages on, compounding supply pressures.

The Philippines is a net importer of oil and relies heavily on Middle East crude, which accounts for roughly 98% of its imports, making it vulnerable to global price shocks.

Iran attacked and set ablaze a fully loaded crude oil tanker off Dubai on early on Tuesday, after President Donald J. Trump warned the United States would obliterate Iran’s energy plants and oil wells if it does not open the Strait of Hormuz, Reuters reported.

The strike on the Kuwait-flagged Al-Salmi is the latest attack on merchant vessels by missiles or explosive air and sea drones in the Gulf and Strait of Hormuz since the US and Israel attacked Iran on Feb. 28. Crude oil prices briefly spiked again after the attack on the tanker, which can carry around 2 million barrels of oil worth more than $200 million at current prices.

Majority of sectoral indices closed in the green on Tuesday. Mining and oil jumped by 2.53% or 389.33 points to 15,769.45; holding firms went up by 2.49% or 112.43 points to 4,627.75; property increased by 2.29% or 44.38 points to 1,980.61; industrials climbed by 1.90% or 166.70 points to 8,916.05; and financials rose by 1.03% or 18.91 points to 1,846.35. Meanwhile, services went down by 0.43% or 11.72 points to 2,707.40.

Advancers outnumbered decliners, 124 to 79, while 62 names closed unchanged.

Value turnover went up to PHP 9.82 billion on Tuesday with 1.04 billion shares traded from the PHP 8.29 billion with 746.28 million issues that changed hands on Monday.

Net foreign selling decreased to PHP 712.33 million from PHP 1.55 billion in the previous session. — Alexandria Grace C. Magno with Reuters

BSP: Inflation likely rose to 3.1-3.9%

Higher fuel, electricity, and rice prices, along with the peso’s weakness, likely pushed inflation to the fastest in around two years, the Bangko Sentral ng Pilipinas (BSP) said on Tuesday.

In its latest month-ahead inflation forecast, the BSP said inflation likely settled between 3.1% and 3.9% in March, faster than the 1.8% clip a year ago and 2.4% in February.

At the upper end of the forecast, inflation may have accelerated to its fastest pace in over two years or since the 4.1% in November 2023. It would also match the headline inflation logged in May 2024.

Meanwhile, at the bottom end, inflation would be the fastest print in 19 months or since the 3.3% clip in August 2024.

The central bank said cheaper prices of vegetables, fish and meat likely tempered price pressures during the month, but rising costs of fuel, electricity and rice weighed on the headline print.

“Inflation risks have intensified with upward price pressures arising from the significant increase in domestic petroleum prices, higher rice prices, increased electricity charges in Meralco-serviced areas, and depreciation of the peso,” it said in a statement.

Local pump prices have soared since the US and Israel launched attacks against Iran in late February.

In March, fuel retailers raised pump prices by up to PHP 43.50 a liter for gasoline, PHP 67.35 per liter for diesel and PHP 70.90 per liter for kerosene.

Meanwhile, Manila Electric Co. (Meralco) hiked electricity rates by 64.27 centavos per kilowatt-hour (kWh) to PHP 13.8161 per kWh last month from PHP 13.1734 per kWh in February. This meant households consuming 200 kWh monthly paid about PHP 129 more in their electricity bill for March.

Rice prices also continued to climb in March, with the average cost of local regular milled rice increasing by 5.8% to PHP 48.69 a kilo in the second half of the month from PHP 46.02 a year earlier.

The price of well-milled rice jumped by 8.02% year on year to PHP 56.68 a kilo, while the price of special rice climbed by an annual 3.79% to PHP 64.07 a kilo.

On the other hand, the local currency likewise took a hit from a strong dollar amid the Middle East war.

On Tuesday, the peso lost 5.8 centavos to close at a new all-time low of PHP 60.748 against the greenback from its previous record finish of PHP 60.69 on Monday, Bankers Association of the Philippines data showed.

Michael Wan, a senior currency analyst at MUFG Global Markets Research, sees the local unit underperforming amid pressures from looming oil shortages and spillovers to other sectors on top of price shocks.

“We think the next phase for Asian currencies may be a shift towards concerns around growth and with that greater risk aversion in markets if the Iran conflict prolongs,” he said in a note on Tuesday. “This will likely mean growth sensitive and current account deficit in emerging market currencies will likely show greater magnitude of underperformance moving forward, including the likes of INR (Indian rupee), PHP (Philippine peso), IDR (Indonesian rupiah), and KRW (Korean won).”

In a March 30 note, Metropolitan Bank & Trust Co. (Metrobank) also said inflation will likely continue to pick up in the coming months amid persisting oil risks from the ongoing Middle East war.

It likewise expects the peso to remain weak in the near term as uncertainties surrounding the war continue to attract safe-haven demand for the US dollar.

This may push the central bank to hike its policy rate before yearend to tame inflation, Metrobank added.

“Metrobank still sees continued upside oil risk, as the Strait of Hormuz, a critical transit point for global oil shipments, remains closed,” it said. “We also expect the Bangko Sentral ng Pilipinas to raise their policy rate this year to combat rising inflation.”

Last week, the BSP maintained its policy rate at 4.25% in an off-cycle meeting as it noted that emerging inflation pressures are supply-driven, in which policy adjustments have little impact.

The BSP’s next policy review is on April 23.

However, BSP Governor Eli M. Remolona, Jr. hinted that future policy decisions will hinge on second-round price effects, adding that a worst-case scenario of USD 200-a-barrel oil price will force them to tighten.

Global oil prices have been hovering around USD 100 a barrel in recent weeks. Brent crude futures went up about 2% to USD 114.98 per barrel on Tuesday, bringing total gains for the month to its highest ever at around 59%, Reuters reported.

The BSP said it will keep assessing the implications of the Middle East conflict on local inflation and economic activity. — Katherine K. Chan, Reporter

DoE says 900,000 barrels of diesel to arrive next month

Energy Secretary Sharon S. Garin on Monday said that a new batch of diesel orders totaling 900,000 barrels are set to arrive in the country next month.

In a virtual press briefing on Monday, Ms. Garin said the Philippine government will receive 300,000 barrels coming from Malaysia and Singapore by early April, another 300,000 barrels from India by the middle of the month, and another 300,000 barrels from Oman by the end of April.

The new supply is expected to boost the country’s petroleum reserves, extending the current average supply to approximately 50.94 days.

“Even though we know that we have enough time to order or look for additional supply, we would like to remind the public that we need to be very prudent because we don’t know how long the war will last,” Ms. Garin said.

Monitoring from the Department of Energy (DoE) showed some oil companies are set to reduce gasoline prices by as much as PHP 2.35 per liter, while some fuel retailers may raise gasoline prices by as much as PHP 2.90 per liter. Diesel prices will increase by PHP 4.50-PHP 12.90 per liter while kerosene prices will go up by PHP 1-PHP 2.40 per liter.

Seaoil Philippines, Inc. will implement a one-time price increase of PHP 12.50 per liter for diesel and PHP 2 per liter for kerosene, beginning Tuesday morning. It will not adjust gasoline prices.

“For now, we’re holding off on gasoline price increases to give motorists a bit of relief where we can,” the company said.

Unioil Petroleum Philippines, Inc. and Petro Gazz will raise diesel prices by PHP 12.50 per liter and gas prices by PHP 2.50 per liter.

Petron Corp. will hike gasoline prices by PHP 1.90 per liter, diesel by PHP 11.90 per liter, and kerosene by PHP 1.40 per liter, while Jetti Petroleum, Inc. will raise the price of diesel by PHP 12.90 per liter and gasoline by PHP 1 per liter.

The latest price adjustments have put a break on double-digit hikes for gasoline for the past three weeks. Diesel and kerosene, on the other hand, continue to see a steady uptrend in prices.

The rise in fuel prices will push the prevailing gasoline prices in the National Capital Region to nearly PHP 115 per liter and diesel prices to as high as PHP 156 per liter.

The Philippines is a net importer of crude oil and sources most of its supply from the Middle East, making the country vulnerable to global crude price swings.

To boost the country’s oil buffer, the government has moved to procure two million barrels of oil, with a budget allocation of PHP 2 billion.

Last week, the Department of Energy (DoE) announced the arrival of the first shipment carrying 142,000 barrels of diesel, part of the 1.04 million diesel the government secured.

The Philippines has been under a state of national energy emergency due to global fuel supply disruptions and rising oil prices. — Sheldeen Joy Talavera

Peso hits new low PHP 60.69 vs dollar

The peso slid to an all-time low against the US dollar on Monday as soaring oil prices raise concerns over inflation and an economic slowdown.

The local unit declined by 14 centavos to close at PHP 60.69 against the greenback from its previous record-low PHP 60.55 finish on Friday, data from the Bankers Association of the Philippines showed.

Year to date, the peso has depreciated by PHP 1.90 or 57.9832% from its PHP 58.79 finish on Dec. 29, 2025.

The peso opened Monday’s trading session flat at PHP 60.55, which was also its intraday best.

Its weakest level of the day was at PHP 60.84, which surpassed the local currency’s previous all-time intraday low of PHP 60.57 logged on Friday.

Dollars traded jumped to USD 2.007 billion from USD 1.336 billion on Friday.

“The peso reached new lows today following reports of potential land-based military deployment of US troops near Iran,” the first trader said in a Viber message.

Reuters quoted US President Donald J. Trump as saying that Iran’s new leaders have been “very reasonable,” as more US troops arrived in the region and Tehran warned it will not accept humiliation.

Markets have been rattled this month after the Iran conflict effectively shut the Strait of Hormuz, a chokepoint for about a fifth of global oil and gas flows, driving Brent crude toward a record monthly rise.

The US dollar index was roughly unchanged at 100.19. It hit 100.54 in mid-March, its highest level since May 2025, and was on track for its biggest monthly rise since July 2025.

The peso was also dragged by growing expectations of a prolonged war, Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said in a Viber message.

A prolonged war in the Middle East is expected to put pressure on the Philippines, which imports nearly all of its oil requirements from Middle Eastern countries. The Philippines is now looking to find alternative sources to alleviate a looming energy shortage.

The Bangko Sentral ng Pilipinas had raised its inflation forecast for 2026 to 5.1% from 3.6% previously and trimmed its 2026 gross domestic product growth estimate to 4.4% from 4.6% previously.

A second trader said via Viber that the local currency’s weakness continued to be a function of a strong dollar and strong demand for oil, adding that high liquidity exaggerated the peso’s drop.

Demand for the greenback was also driven by the government’s recent purchases of oil, which are settled in dollars and other foreign currencies, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The second trader said the local unit could reach the PHP 61-per-dollar level, though “not in a straight line as the market is stretched.”

For Tuesday, Mr. Ricafort and the first trader see the peso moving between PHP 60.55 and PHP 60.80 against the greenback. — AMCS with Reuters

PSEi slides to 4-month low as Iran war escalates

The main index sank to an over four-month low on Monday as the war in the Middle East escalated further, worsening market worries over the economic fallout from the conflict.

The benchmark Philippine Stock Exchange index (PSEi) fell by 1.73% or 103.34 points to close at 5,869.49, while the broader all shares index went down by 1.19% or 40.01 points to end at 3,295.85.

This was the PSEi’s worst close so far this year and is its lowest finish since it ended at 5,813.71 on Nov. 19.

“The Philippine market opened the week lower as the Middle East war entered its fifth week, the conflict continued to escalate despite ongoing efforts to reach a diplomatic resolution,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“The prolonged tensions have continued to weigh on market risk appetite, as both geopolitical and economic factors persistently dampen investor sentiment. External uncertainties and macroeconomic pressures continue to drive cautious trading behavior across markets.”

Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message that the market kicked off the shortened trading week on a sour note amid fading hopes of a de-escalation in the conflict. “Global oil prices remain elevated while the peso depreciates, further keeping worries over the Philippines’ inflation outlook high.”

The Israeli military said on Monday that Iran launched multiple waves of missiles at Israel, and an attack had also been launched from Yemen for only the second time since the US-Israeli war began, Reuters reported.

The latest attacks came a day after President Donald J. Trump said the US and Iran had been meeting “directly and indirectly” and that Iran’s new leaders have been “very reasonable,” as more US troops arrived in the region.

Stocks slumped in Asia on Monday as investors dug in for a protracted conflict, bringing a spike in inflation and the risk of recession to much of the globe.

Meanwhile, oil prices looked poised to extend their gains. Brent crude futures jumped USD 2.43, or 2.16%, to USD 115 a barrel by 0342 GMT after settling 4.2% higher on Friday.

Majority of sectoral indices closed lower on Monday. Financials slid by 3.25% or 61.41 points to 1,827.44; mining and oil sank by 2.41% or 380.76 points to 15,380.12; holding firms dropped by 2.30% or 106.29 points to 4,515.32; property retreated by 1.89% or 37.36 points to 1,936.23; and industrials went down by 0.97% or 86.26 points to 8,749.35.

Meanwhile, services edged up by 0.03% or 0.83 point to 2,719.12.

Decliners outnumbered advancers, 126 to 74, while 60 names closed unchanged.

Value turnover went down to PHP 8.29 billion on Monday with 746.28 million shares traded from the PHP 8.95 billion with 2.47 billion issues that changed hands on Friday.

Net foreign selling ballooned to PHP 1.55 billion from the PHP 95.54 million in the previous session. — A.G.C. Magno with Reuters

Business confidence improves in February before Middle East conflict — BSP survey

Businesses were more optimistic in February as they expected strong consumer demand and better economic conditions, results of the Bangko Sentral ng Pilipinas’ (BSP) monthly business expectations survey (BES) showed.

The central bank’s BES for February showed that businesses had an overall current-month confidence index (CI) of 8.2%, picking up from the 0.9% seen in January.

A positive CI shows that more respondents are optimistic than pessimistic.

“Respondents attributed their more optimistic sentiment in February 2026 to: higher income and sales supported by stronger demand for goods and services, better domestic economic conditions, including higher growth prospects and stable inflation, and improved investor confidence on the back of higher public infrastructure spending and sustained governance reforms,” the BSP said.

The February 2026 BES was conducted from Feb. 5-28, before the onset of the US-Israeli war on Iran.

“The sustained recovery in business confidence and stable inflation expectations will therefore depend on how long the (Middle East) conflict lasts and how it affects the domestic economy,” the central bank said.

The survey also showed businesses were more optimistic for the second quarter and the next 12 months.

The confidence index for the next three months rose to 37.4% from 33.3% previously, as businesses anticipate “firmer consumer demand during the summer season, favorable weather conditions, higher public works spending, stable inflation, and recovery in investor confidence.”

At the same time, the CI for the year ahead went up to 51.1% from 38.6% previously, driven by expectations of stronger demand during the peak season and Christmas holidays, higher productivity and efficiency in business operations, and better economic prospects.

Meanwhile, the BSP survey showed firms expect a “less tight cash position but tighter credit access” in February.

The financial condition index, which refers to a firm’s general cash position considering the level of cash and other cash items and repayment terms on loans, improved but remained in negative territory at -15.2% in February from -19.2% in January.

In contrast, the credit access index turned more negative to -4% in February from -0.6% in the prior month. This refers to the firm’s external environment, such as the availability of credit in the banking system and other financial institutions.

The BSP survey also showed the average capacity utilization for both the industry and construction sectors slipped to 67.2% in February from 69.6% in January.

“The decline was mainly driven by an increase in the number of industry firms operating at medium capacity (60-69%) and a decrease in the number of firms operating at high capacity (80-100%),” the BSP said.

According to respondents, business activity was limited due to stiff domestic competition, insufficient demand, and high interest rates.

Meanwhile, firms had a better jobs outlook in the next quarter and the next 12 months.

The employment outlook for the next three months went up to 27.2% from 11.3% previously, while the outlook for the year ahead rose to 30% from 23.3% previously.

“However, industry sector expansion may ease over the same period. The share of businesses in the industry sector with expansion plans for May 2026 and the next 12 months declined from 14.1% and 24.3% to 11.6% and 14.2%, respectively, the BSP said.

Peso, inflation outlook

The BSP survey also showed businesses expect the peso to appreciate against the US dollar in the near term but expect it to depreciate over the next 12 months.

Firms saw the local unit averaging PHP 58.68 per dollar for February, PHP 58.76 for May, and PHP 58.94 over the next 12 months.

In February, the peso appreciated by 1.195 or by 2.03% to close at PHP 57.665 on Feb. 27 from its PHP 58.86 finish on Jan. 30.

However, the peso slumped against the US dollar in March, mainly due to global pressures — higher oil prices, stronger US dollar and skittish investors amid the Middle East conflict. On Friday, the local unit dropped to a new record low at PHP 60.55, weakening by 32 centavos from its PHP 60.23 finish on Thursday, Bankers Association of the Philippines data showed.

At the same time, the BSP said business inflation expectations are still “well-anchored.”

Firms saw inflation averaging 2.3% in February and picking up to 2.5% in May and 2.7% in the next 12 months.

“These expectations fall below the BSP’s 3% inflation target for 2026 but remain within the tolerance range of ±1 percentage point around the target,” the central bank said.

The consumer price index rose 2.4% in February from a year earlier, making it the fastest print since 2.9% in January 2025. This brought the average inflation to 2.2% in the January-to-February period.

Last week, the BSP raised its inflation forecast for 2026 to 5.1% to 3.6% previously, amid the Middle East conflict. — Aaron Michael C. Sy Reporter

Gov’t eyes offshore issuance in Q2

The government is looking at tapping the offshore bond market in the second quarter, the Bureau of the Treasury (BTr) said.

“We still have USD 2.5 billion left in the borrowing program, so we are looking at whether we issue (in the) second quarter or third quarter,” National Treasurer Sharon P. Almanza told reporters on the sidelines of an event on Thursday.” There is a possibility for a second-quarter issuance.”

In January, the government raised USD 2.75 billion from a triple-tranche dollar bond issuance. It generated USD 500 million from the 5.5-year bonds at a coupon rate of 4.25%; USD 1.5 billion from the 10-year paper at a coupon rate of 5%; and USD 750 million from the 25-year papers at a 5.75% coupon.

Ms. Almanza said US Treasury yields have remained relatively stable compared with local rates, creating a less volatile environment.

Meanwhile, the BTr is hoping the central bank’s off-cycle policy move on March 26 will help calm markets and drive demand for government securities in the coming quarter.

This follows the drop in bids and spike in yields in March after the US-Israeli war on Iran began.

The Bangko Sentral ng Pilipinas (BSP) kept its policy rate unchanged at 4.25% during a surprise off-cycle meeting last week, amid growing concerns over the impact of the Middle East war on the economy.

BSP Governor Eli M. Remolona, Jr. had said they decided to stand pat as their growth outlook remains clouded and as emerging inflationary risks prove supply-driven, “for which monetary policy has limited effectiveness.”

The BSP now expects headline inflation to average 5.1% this year from 3.6% previously. If realized, the headline print would breach its 2%-4% target.

Ms. Almanza said that a large maturity in April worth about PHP 200 billion could add liquidity to the market and drive demand for government securities.

“We have a maturity in April. So, hopefully, those funds will be reinvested,” she said.

The government is looking to borrow up to PHP 784 billion from the domestic debt market in the second quarter or up to PHP 364 billion via Treasury bills and up to PHP 420 billion through Treasury bonds.

Ms. Almanza noted that the borrowing plan for the second quarter includes a mix of short-term and medium-term securities.

“We’re combining the long with the short. And then we’re reducing the volume for the longer tenors,” she said.

Ms. Almanza also said foreign participation in the government securities market could surge as soon as the country’s re-entry into JPMorgan Chase & Co.’s Government Bond Index-Emerging Markets (GBI-EM) is confirmed by the first week of April.

“They said that the investors don’t wait for the actual inclusion. So, after the announcement, funds will [start coming in already],” she said.

In September last year, Philippine peso-denominated government bonds (RPGB) were tagged as “Index Watch Positive,” which is the final review phase for the bonds’ potential inclusion in JPMorgan’s GBI-EM.

JPMorgan’s GBI-EM tracks the performance of sovereign and quasi-sovereign bonds issued by emerging market countries. The country’s inclusion will need to be approved by a certain percentage of investors reviewing the index.

The Philippines’ global peso notes were removed from the GBI-EM in January 2024 due to illiquidity. Potential inclusion in the index are RPGBs issued from 2023 with tenors up to 20 years. — A.M.C.Sy

ERC suspends electricity trading as prices set to surge

The Energy Regulatory Commission (ERC) has temporarily halted the trading in the country’s electricity spot market to curb the impact of rising prices, which is seen hitting PHP 9 per kilowatt-hour (kWh) amid the ongoing energy crisis.

In a statement on Thursday, the ERC ordered the suspension of the operations of the Wholesale Electricity Spot Market (WESM) across Luzon, Visayas, and Mindanao grids starting on Thursday (March 26).

WESM is where energy companies can buy power if their long-term contracted power deals prove inadequate for their needs.

The suspension was triggered by the executive order recently signed by President Ferdinand R. Marcos, Jr., declaring a state of national energy emergency due to global fuel supply disruptions and rising oil prices.

The Department of Energy (DoE) had also recommended the suspension of the WESM operations.

Local pump prices have more than doubled since the US-Israeli war on Iran began last month, causing an unprecedented supply disruption in the Middle East that sent global fuel prices soaring.

While oil only takes up a small portion of the country’s power generation mix, other fuel sources also mirror this volatility, prompting the suspension of the WESM.

The WESM suspension will remain in effect until the ERC, in consultation with the DoE, determines that conditions are “suitable for the safe resumption of normal market operations,” the regulator said.

Amid suspension, the ERC is introducing a new pricing mechanism wherein the regulator sets prices depending on the type of power plant.

Under the modified administered pricing mechanism, prices will be based on prevailing fuel costs, replacing the use of historical market prices that do not reflect current conditions marked by geopolitical tensions and fuel supply constraints.

The ERC said that the modified approach seeks to “strike a balance between protecting consumers from excessive price spikes and ensuring that generators remain financially viable to sustain a reliable electricity supply.”

“The temporary suspension of the WESM and the implementation of a modified administered pricing mechanism are necessary measures to cushion the impact of volatile fuel prices and safeguard the integrity of our power system,” ERC Chairperson and Chief Executive Officer Francis Saturnino C. Juan said.

The Philippine Independent Power Producers Association (PIPPA) said that the proposed pricing mechanism is intended to work during “extraordinary circumstances” such as a national energy emergency.

“We support the ERC’s proposed modified administered pricing mechanism since per our initial evaluation, it is an equitable solution to protect the public and the energy stakeholders in this extraordinary situation,” PIPPA Executive Director Anne E. Montelibano told BusinessWorld.

Ms. Montelibano said that power generators will comply with the directive to ensure energy reliability and security.

The ERC chief confirmed to BusinessWorld that the WESM suspension is also intended to optimize available resources and temper any rate increase.

Initial simulations conducted by the Independent Electricity Market Operator of the Philippines (IEMOP) show that the average cost of procuring supply from the WESM could reach as high as PHP 9 per kWh.

This represents a significant jump from the pre-Middle East conflict average price of around PHP 5 per kWh or less.

IEMOP also observed that the costs of power supply from bilateral contracts are likely to increase as prices of fuel escalate.

In line with this, the DoE has called for the increased use of renewable energy, coal, and other indigenous energy sources.

In a separate statement, the department said that the full dispatch of indigenous sources and coal-fired power plants can reduce the increase in WESM prices by up to PHP 2 per kWh.

“As a net importer of oil, coal, and liquefied natural gas, we are acting with heightened discipline to preserve power system reliability in the face of escalating global fuel market volatility,” Energy Secretary Sharon S. Garin said.

“This is a decisive intervention to protect the grid, manage fuel use responsibly, and ensure that essential electricity services remain uninterrupted,” she said.

To further cushion the upward pressure in electricity rates, the DoE also directed power generators to explore feasible fuel alternatives that can help reduce costs and maintain supply. This includes higher biodiesel blends for oil-based plants and coal blending.

For off-grid areas, which are heavily affected by rising fuel prices due to their reliance on diesel generation, the DoE told utilities to optimize available generation, secure adequate fuel supply, and implement demand-side management measures.

The DoE said it will closely monitor compliance, coordinate with key agencies, and take further action as needed to ensure system reliability, orderly market conditions, and consumer protection. — Sheldeen Joy Talavera, Reporter

Peso sinks further as market eyes Iran deal

The peso slid further against the dollar on Thursday due to lingering uncertainty over the war in the Middle East as markets awaited clearer signs of a potential de-escalation or ceasefire.

The local unit declined by 13 centavos to close at PHP 60.23 against the greenback from its PHP 60.10 finish on Wednesday, data from the Bankers Association of the Philippines showed.

The peso opened Thursday’s trading session sharply weaker at PHP 60.20 per dollar. It traded lower than Wednesday’s close the entire day, with its intraday best at just PHP 60.15 and its weakest showing at PHP 60.275 against the greenback.

Dollars traded went down to USD 1.17 billion from USD 1.71 billion on Wednesday.

“The dollar-peso closed higher, still due to uncertainties between the US and Iran and a lack of clear terms for the resolution of the war,” a trader said in a phone interview.

The trader added that the Bangko Sentral ng Pilipinas (BSP) off-cycle meeting did not materially affect trading on Thursday, although its impact could be felt on Friday once the market digests signals from officials.

“The market also expected an off-cycle meeting, mainly just signaling assurance that they are monitoring,” the trader said.

The Monetary Board was scheduled to have its next policy review on April 23, but BSP Governor Eli M. Remolona, Jr. said they decided to hold a meeting on Thursday as the economic situation has shifted drastically since they last met on Feb. 19.

At its review, the BSP kept the policy rate at 4.25%, with Mr. Remolona saying that adjusting their monetary settings would have limited effectiveness as current inflation risks due to the war in the Middle East are largely supply-driven.

The central bank now expects headline inflation to average 5.1% this year — well above its 2%-4% tolerance band. Annual inflation last breached its target in 2023.

“At the same time, the BSP sees continued weak economic growth in 2026. To raise the policy rate at this time would delay the recovery,” the central bank said in a statement.

“Looking ahead, mounting risks to inflation will require sustained vigilance. Monetary policy will focus on addressing likely second-round effects that may arise.”

For Thursday, the trader sees the peso moving between PHP 60 and PHP 60.40 per dollar.

Meanwhile, MUFG Global Markets Research Senior Currency Analyst Lloyd Chan said in a report that the peso is among the weakest performing currencies in Asia, “reflecting sensitivity to oil prices and risk sentiment.”

For Mr. Chan, oil prices must go down or the US-Israel war on Iran has to ease for the peso to recover.

Mr. Remolona said on Thursday that the peso, at its current level, has not warranted heavy intervention from the central bank.

The BSP chief added that they have internal thresholds showing at what level they expect the peso’s weakness to become inflationary, which help guide their inflation forecasts, policy decisions, and the extent of their activity in the foreign exchange market.

“So far, we don’t intervene to maintain a level for the peso. We intervene largely to dampen the swings in the peso that are inflationary,” Mr. Remolona said. — Aaron Michael C. Sy with a report from Katherine K. Chan

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