The peso slid to a new record low against the US dollar on 13 March, closing at P59.735 per dollar and edging closer to the dreaded P60 level as escalating conflict in the Middle East and surging global oil prices weighed on investor sentiment and emerging-market currencies.

According to RCBC Chief Economist Michael Ricafort, breaching the P60 level could prompt the government to roll out significant subsidies to mitigate the impact of surging global oil prices and inflationary pressures brought about by the conflict, “especially on the most vulnerable sectors such as transportation, fisherfolk, farmers and the poorest of the poor.”

“On top of conservation measures on the use of oil and petroleum, energy and electricity, there should also be a structural shift toward renewable energy sources such as solar, wind, geothermal and hydroelectric power, as well as greater adoption of electric and hybrid vehicles — all of which would reduce the country’s dependence on imported oil and energy,” he said in a message to Daily Tribune.

Global oil prices fluctuated heavily last week, with prices briefly exceeding $100 per barrel last Monday, sending the local bourse tumbling by nearly 5 percent as investor fears peaked. However, US President Donald Trump’s later signals of a desire to end the conflict — coupled with warnings that retaliatory action against Iran could occur if the Strait of Hormuz remains closed — helped ease global prices.

The latest pressure on the peso came as global crude prices surged to around $98 per barrel, among the highest levels since 2022, following intensified hostilities involving Iran and threats to shipping routes in the Strait of Hormuz, a critical chokepoint for roughly 20 percent of global oil supply. Analysts warn that disruptions in the region could fuel inflation and slow global economic growth, particularly for oil-importing economies such as the Philippines.

Industry sources also pointed to possible further domestic pump price hikes this coming week of as much as P14.69 per liter for gasoline and P17.72 per liter for diesel.

Ricafort noted the “risk of higher local oil prices, inflation and interest rates,” adding that higher transport fares, wage pressures and second-round inflation effects — such as rising prices of other goods and services — may arise from the conflict.

“The death of the Iranian leader and other Iranian officials could potentially weaken Iran’s position and could also influence how long the conflict will last. This could shorten the conflict and reduce retaliatory attacks by Iran and its proxies in the Middle East, though this is not assured,” he added.

Bangko Sentral ng Pilipinas Governor Eli Remolona previously said central bank intervention in the foreign exchange market remains an option should geopolitical tensions continue to weaken the peso. Officials have also hinted that a possible policy rate hike could be considered if inflation risks increase due to higher oil prices.

Meanwhile, Ateneo Center for Economic Research and Development (ACERD) director Alvin Ang said in a Sunday radio interview that the country needs long-term solutions to address future rounds of fuel price hikes, beyond the proposed temporary reductions in value-added and excise taxes on oil.

“Even if we have that, it isn’t sustainable because we don’t know how long the conflict will be. Maybe it could work as a temporary solution, maybe for about a month,” he said in Filipino.

Senate leaders earlier said the chamber intends to pass a bill granting President Ferdinand Marcos Jr. emergency powers to suspend or cut fuel excise taxes amid the Middle East conflict as early as next week.

“This problem will not end by tomorrow. It will have a significant impact, and it is not easy to address. It will also spread to other products that use oil,” Ang added.