Peso, stocks sink as oil prices surge

The Philippine peso plunged to a new record low against the dollar on Monday while the main stock benchmark recorded its steepest single-day drop since 2020 as global oil prices spiked, threatening to drive up inflation as the war in the Middle East rages on.

The local unit fell by 50 centavos to close at a new all-time low of PHP 59.50 against the greenback from its PHP 59 finish on Friday, data from the Bankers Association of the Philippines showed. This surpassed the previous record-low close of PHP 59.46 logged on Jan. 15.

Year to date, the peso is now down by 1.19% or 71 centavos from its end-2025 close of PHP 58.79.

The peso opened Monday’s trading session sharply weaker at PHP 59.25 per dollar, which was already its peak for the day. Its weakest showing was at PHP 59.71, which is now the lowest intraday level the local unit has touched.

Dollars traded surged to USD 2.597 billion from USD 1.847 billion on Friday.

The peso’s intraday low was likely a knee-jerk reaction to oil prices hitting USD 100 per barrel early in the trading day, the first trader said in a Viber message.

The peso’s decline on Monday was driven by global risk-off sentiment and stronger dollar demand amid the conflict in the Middle East, Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said in a Viber message.

“Heightened geopolitical tensions, particularly the conflict in the Middle East, have pushed investors toward safe-haven assets like the US dollar, putting pressure on emerging-market currencies including the peso. At the same time, higher global oil prices raise concerns about the Philippines’ import bill since the country is a net energy importer, increasing demand for dollars in the local market,” he said.

“Also, expectations that US interest rates may stay higher for longer tend to strengthen the US dollar relative to regional currencies. When these external factors coincide with thin market liquidity or speculative positioning, the Philippine peso can experience sharper intraday moves.”

The US dollar jumped on Monday as soaring oil prices sent investors scrambling for cash on worries that a protracted Middle East war could severely disrupt energy supplies and hurt global growth, Reuters reported.

It pared some gains in the Asian afternoon on a Financial Times report that the Group of Seven finance ministers will discuss on Monday a joint release of oil from emergency reserves coordinated by the International Energy Agency. The report sent oil prices retreating slightly after they earlier spiked to just shy of USD 120 per barrel.

Analysts have said Asia could bear the brunt of the energy price shock, due to the region’s heavy reliance on oil and gas from the Middle East.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort added in a Viber message that the peso was also dragged by signals of potential monetary tightening from Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr.

Mr. Remolona said Philippine inflation could breach 4% if oil prices surge past USD 100 per barrel, which could force them to hike rates again.

For Tuesday, the first trader expects the peso to move between PHP 59.40 and PHP 59.65 per dollar, while Mr. Ricafort sees it ranging from PHP 59.35 to PHP 59.60.

In the near term, Mr. Rivera said the peso may remain under pressure due to persisting external pressures and range from PHP 59 to PHP 60 per dollar before the BSP’s next policy meeting on April 23. He added that the country’s gross international reserves are sufficient to manage short-term pressures without significantly weakening the country’s external position.

“At current levels, we are expecting the peso to test the key P60 level but as the recent movement in the peso has been driven by a sudden event, BSP intervention cannot be ruled out as this sudden FX (foreign exchange) movement could endanger domestic inflation expectations,” the first trader added.

The second trader said the peso will likely track other Asian currencies in the near term, but will likely continue to be one of the worst performers in the region as the conflict could also affect remittances.

Stocks

Worsening sentiment due to the prolonged conflict also affected the equities market, with the Philippine Stock Exchange index (PSEi) plunging 4.97% or 314.19 points to close at 6,006.22, while the broader all shares index went down by 4.24% or 148.24 points to end at 3,346.75.

This was the bellwether’s largest single-day drop since April 16, 2020, when it went down by 7.07% or 420.45 points to 5,525.60. This was also its lowest finish in almost three months or since it closed at 5,920.87 on Dec. 19, 2025.

The PSEi opened Monday’s session at 6,198.45, dropping 1.93% from Friday’s finish of 6,320.41 and already its high for the day. It crashed to an intraday low of 5,938.39, down 6.04% versus Friday’s level, but managed to climb back above the 6,000 mark before the closing bell.

“Financial markets are now in full risk-off mode in the face of USD 100 oil and the prospect of a prolonged war in the Middle East,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

Unicapital Securities Research Head Wendy B. Estacio-Cruz said the spike in crude oil prices presents short-term inflation threats for the Philippines, a net oil importer, which would affect the BSP’s easing cycle and further erode investor sentiment.

“For equities, higher oil effectively acts as a tax on consumption and corporate margins, weighing on consumer, property, and transport-related sectors that dominate the PSEi, while global risk aversion could trigger foreign outflows from emerging markets, putting additional pressure on valuations and the peso,” she said in a Viber message.

“In this environment, defensive sectors such as utilities, power producers, and telecommunications may prove more resilient given their stable cash flows and pricing pass-through mechanisms, while companies with dollar revenues or export exposure could also benefit from potential peso weakness.”

F. Yap Securities Investment Analyst Marky Carunungan likewise said that rising oil prices could drive up inflation expectations and lead to tighter financial conditions.

“If the conflict leads to a sustained spike in oil prices, the main macro risks would be higher inflation and a delayed easing cycle from the BSP. That could keep interest rates elevated for longer, which historically weighs on equity valuations.”

“The near-term impact centers on rising inflation and growth concerns. With oil prices surging, fears are mounting that the cost of goods and services could accelerate, as transportation and logistics rely heavily on fuel. At the same time, with GDP (gross domestic product) growth already at relatively modest levels, the risk of stagflation — slowing growth combined with rising prices — could begin to emerge,” DragonFi Securities analyst Jarrod Leighton M. Tin added. — Aaron Michael C. Sy and Alexandria Grace C. Magno