Philippine Peso Nears Record Low Against US Dollar Amid US-Iran Tensions

The Philippine peso is nearing its record low against the US dollar amid rising tensions between the United States and Iran. The local currency shed 11.1 centavos to close at P61.71:$1 on Tuesday, down from P61.599:$1 on Monday. This level is close to the record low of P61.75:$1 seen in May. Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the peso's weakness comes as global crude oil prices climbed to new one-month highs following recent US-Iran clashes related to issues on the Strait of Hormuz. He noted that US President Trump had re-imposed a blockade on Iranian ships transiting the Strait of Hormuz and demanded a 20% reimbursement on all other cargo shipped through it. However, Ricafort added that the peso exchange rate had been relatively stable versus the US dollar recently amid possible intervention or smoothing of market volatility at P61.60-P61.70 per dollar levels. US President Donald Trump said on Monday that the United States would "probably" take over the Strait of Hormuz and should be reimbursed for controlling the vital waterway. The International Maritime Organization (IMO) opposed the plan, stating that ships should not pay fees to pass through maritime waterways. "IMO stands firmly against charging fees for passage through straits used for international navigation. There is no legal basis through which to introduce mandatory tolls simply to transit through a strait," the UN agency said. The Philippine economy, heavily reliant on remittances from overseas workers, faces potential inflationary pressures from rising import costs, which could strain household budgets. Specifically, the surge in crude oil prices is a concern as it may lead to increased transportation costs, impacting domestic prices across the board. The Bangko Sentral ng Pilipinas (BSP), the central bank, has the authority to intervene in the market to stabilize exchange rates and has a history of doing so in similar situations.