Peso breaches P60, market tumbles on fears of MidEast crisis escalation

The Philippine peso breached the dreaded P60 level on Thursday, weakening to P60.10 as of 4 p.m., after fresh developments in the Middle East conflict sent global oil prices soaring.

On the morning of 19 March (Philippine time), Israel carried out another strike on Iran’s energy infrastructure, hitting parts of the South Pars gas field — a key component of Iran’s oil and gas supply.

In retaliation, Iran hit Qatar’s Ras Laffan LNG facility amid a broader campaign in the United Arab Emirates and Saudi Arabia. These strikes threaten to further ignite the entire region into an even more ominous phase, i.e., all-out conflagration, heightening fears of broader disruption across the Mideast, particularly involving major producers and critical shipping routes, and raising even more serious concerns about global energy supply.

Immediate reaction

Oil markets reacted immediately. Brent crude surged by around 5 to 6 percent, briefly reaching approximately $112 to $113 per barrel, while West Texas Intermediate climbed to about $97 to $100.

The spike was driven less by confirmed damage and more by rising geopolitical risk, as traders priced in the possibility of escalating attacks on regional energy facilities.

Peso slides

Shortly after, the peso slid further, touching an intraday low of P60.40 — its weakest level on record against the US dollar — crossing the threshold the President had previously warned about.

Data from the Bankers Association of the Philippines showed both the morning and afternoon weighted averages hovering around the P60 level, as Israel’s latest strike heightened concerns over global supply chains and oil prices.

The Middle East conflict has continued to exert pressure on the local currency, which has hit record lows three times over the past week, peaking at P59.87 per US dollar on Monday.

Iran has since identified key regional oil and gas assets in Saudi Arabia, the United Arab Emirates and Qatar as “direct and legitimate targets,” warning that these sites should be evacuated in the coming hours.

The United States’ involvement in the conflict, coupled with tightening global oil supply, has boosted demand for the US dollar as a safe-haven asset.

BSP hands off on forex intervention

Bangko Sentral ng Pilipinas (BSP) officials reiterated the central bank’s hands-off approach to foreign exchange intervention in a statement issued yesterday.

“On the peso, the BSP stresses that it operates in the foreign exchange market to smooth excess volatility and maintain orderly conditions. This is consistent with a flexible exchange rate policy, with intervention limited to tempering large swings that could affect inflation rather than defending any specific level,” the statement said.

Local bourse falls

Meanwhile, the local bourse fell to 6,018.62, down 36.83 points or 0.61 percent, as investors digested the morning’s developments — particularly the spike in global oil prices — prompting cautious selling that pushed the benchmark Philippine Stock Exchange index below the 6,000 level at midday.

Selective bargain hunting later lifted the index slightly above the 6,000 mark by the close, although most sectors — except industrials — ended the session in negative territory.

Apex Mining Co. Inc. posted the steepest decline among blue chips, falling 6.67 percent. Meanwhile, BDO Unibank Inc. bucked the broader downturn, rising 1.84 percent to emerge as the day’s top gainer.