The Philippine Stock Exchange Index (PSEi) slipped 18.31 points, or 0.30 percent, to close at 6,135.35 on Friday, while the peso weakened to P60.775 per US dollar from P60.567 previously.

The benchmark index extended its recent pullback as investors digested the Bangko Sentral ng Pilipinas’ (BSP) more hawkish inflation outlook and the possibility that interest rates may remain elevated for longer.

The BSP raised its key policy rate to 4.75 percent on Thursday in response to inflationary pressures stemming from the Gulf conflict. While higher interest rates help curb inflation, they can also weigh on economic growth and corporate earnings.

Trading remained active, with value turnover reaching P10.71 billion. Foreign investors, however, remained net sellers, posting net outflows of P451.99 million, indicating continued caution among offshore funds.

Banks bucked the broader market decline, with the Financials sector rising 0.75 percent on expectations of stronger net interest margins in a higher-rate environment. Most sectors ended in negative territory, led by Mining & Oil, which fell 3.76 percent.

Investor sentiment was also tempered by concerns that the recently announced US-Iran memorandum of understanding could still face implementation challenges despite easing immediate fears of disruptions to global oil supplies.

Meanwhile, the peso weakened further against the US dollar, closing at P60.775 from P60.567 on June 18, a depreciation of 20.8 centavos, or 0.34 percent.

The currency traded within a range of P60.635 to P60.820 during the session, while the weighted average settled at P60.720.

The peso’s decline reflected renewed demand for the US dollar after the BSP raised its inflation forecasts for both 2026 and 2027, reinforcing expectations that domestic monetary policy could remain restrictive for an extended period.

At the same time, global investors continued to favor dollar-denominated assets amid lingering geopolitical uncertainty despite easing tensions in the Middle East. Although the US-Iran agreement reduced fears of prolonged disruptions to shipping through the Strait of Hormuz and helped stabilize energy markets, investors remained cautious about the durability of the accord, supporting safe-haven demand for the greenback.