The local bourse shed 40.66 points, reversing part of Tuesday’s 2.31-percent rebound even as the peso slumped to P62.56 from September 1’s P62.40 against the US dollar as conflict between the US and Iran escalated around the Strait of Hormuz, a key route for global oil shipments.
The Philippine Stock Exchange Index (PSEi) fell 0.67 percent to 6,053.23 on Wednesday, while the peso weakened 0.26 percent to P62.565 per US dollar, its second consecutive record-low close.
Investors turned defensive amid another sharp rise in global oil prices and bond yields following renewed escalation between the United States and Iran.
Rebound reversed
The PSEi shed 40.66 points, reversing part of Tuesday’s 2.31-percent rebound. Trading value reached P5.14 billion, while foreign investors were net sellers by P559.82 million, indicating continued portfolio de-risking.
Industrials were the only sector to advance, gaining 0.38 percent, while Services fell the most at 1.46 percent. Among index members, Manila Electric Co. rose 3.92 percent to P456.00, while DigiPlus Interactive Corp. fell 7.05 percent to P10.02.
The BAP spot USD/PHP rate closed at P62.565, compared with P62.40 on 1 September. Reuters reported that the peso reached an intraday record of P62.652 per dollar. The BSP’s official reference rate, meanwhile, was P62.359, reflecting a different benchmark and methodology.
Sharp U.S.-Iran conflict escalation
The principal catalyst was the sharp escalation of the US-Iran conflict around the Strait of Hormuz. US forces launched another wave of strikes against Iranian targets, while Iran retaliated against US positions in the region. The confrontation followed attacks on two tankers leaving the Strait, a key route for global oil shipments.
The escalation pushed oil prices higher, with Brent crude reaching $97.04 per barrel intraday, its highest level since July 24, while WTI reached $92.29.
Higher oil prices are particularly unfavorable for the peso because the Philippines is a net energy importer. More expensive crude increases the country’s dollar requirements for fuel imports while raising inflation risks and squeezing consumer purchasing power and corporate margins.
External shock compounded by dollar rally
The external shock was compounded by a broad dollar rally. The US Dollar Index reached 99.808, its highest level since 17 August, while the US 10-year Treasury yield climbed to 4.812 percent, its highest since November 2023. Higher US yields make dollar-denominated assets relatively more attractive, putting additional pressure on emerging-market currencies.
