Peso sinks to P59.385:$1

The Philippine peso weakened against the US dollar for the second straight trading day on Thursday, as global crude oil prices rose amid the ongoing tensions in the Middle East.

The local currency shed 21.5 centavos to close at P59.385:$1 versus Wednesday’s finish of P59.17:$1. The peso earlier this week hit a fresh record low of P59.5:$1.

Thursday’s depreciation comes as global crude oil prices surged to the highest in over two years, or since October 2023, amid the ongoing risk to global supply chains due to the closure of the Strait of Hormuz, a key global shipping corridor that carries around a fifth of the world’s oil.

This comes as Iranian boats appear to have attacked two fuel tankers in Iraqi waters after three projectiles hit three vessels in Gulf waters, as reported by Reuters.

The International Energy Agency (IEA), for its part, agreed to release 400 million barrels of oil in a bid to tame global crude prices.

“(H)igher global crude oil prices could lead to higher inflation and slower economic/GDP (gross domestic product) growth,” Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said in a mobile message.

The Department of Economy, Planning, and Development (DepDev) earlier warned that inflation could accelerate to as high as over 7% should the Middle East conflict escalate further and for a longer period.

The government is now looking at the possibility of suspending the excise tax on fuel products, which the DepDev said could cut local prices per liter by P10 for gasoline and P6 for diesel.

President Ferdinand “Bongbong” Marcos Jr. has already certified as urgent the bill that would grant him emergency powers to suspend or cut such excise taxes.

Moving forward, Ricafort said the peso-dollar exchange rate could range from P59.25 to P59.50:$1. — VBL, GMA Integrated News