Malacañang on Thursday expressed concern over the weakening of the Philippine peso, which fell to P61.5 against the U.S. dollar in intraday trading.

Palace press officer and Presidential Communications Undersecretary Claire Castro said the currency’s depreciation is largely driven by external factors, particularly the ongoing Middle East crisis.

Castro, speaking at a Palace briefing, cited Department of Economy, Planning, and Development Secretary Arsenio Balisacan on the peso’s decline.

“Depreciation results from overlapping factors mainly external to the Philippine economy. There are two major ones; one is the unusually strong US dollar, which is pulling capital toward US assets and away from emerging markets like the Philippines. This makes the peso weaker simply because the dollar is rising faster,” Castro said, quoting Balisacan.

Balisacan also cited sharp global oil price increases, combined with the country’s reliance on imports, as another key factor.

“This causes the country’s demand for dollars to spike, the trade and current account deficits to rise, and, in turn, the peso to weaken. In short, the peso depreciation reflects the rise of the demand for dollars faster than the supply of dollars,” he said.

Castro added that the government is closely monitoring the situation and considering measures to help stabilize the currency.

“First, it is the BSP, our central bank, that has the institutional mandate to stabilize the peso and prevent excessive volatility. Its ammunition is sufficient to prevent excessive volatility,” Balisacan said.