THE PESO could slide to new record lows against the dollar this week as the escalating conflict in the Middle East continues to push up global oil prices, heightening inflation concerns, and amid expectations of a rate hike from the US Federal Reserve this week.
On Friday, the local unit sank by 14.5 centavos to close at a new all-time low of P62.68 from P62.535 on Thursday, surpassing the previous record of P62.625 on Sept. 8.
Year to date, the currency has depreciated by P3.89 or 6.21% from its P58.79 finish on Dec. 29, 2025.
Friday’s intraday low of P62.775 also matched the peso’s weakest showing on record last seen on Sept. 7.
Week on week, the peso slid by 18.5 centavos from its P62.59 finish on Sept. 4.
The peso weakened on Friday as bets of a Fed hike were bolstered by strong US inflation data, a trader said by phone.
Surging global oil prices also dragged the peso as Brent crude hit $109 a barrel, even as it pulled back later, the trader added.
“The peso weakened further to P62.68 per US dollar on Friday from P62.535 previously as market participants positioned ahead of the closely watched US August inflation report, which could shape expectations for next week’s Federal Reserve policy decision,” Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said in a Viber message.
“While easing oil prices and a modest pullback in US Treasury yields provided some support to risk sentiment, demand for dollars remained firm amid expectations that persistent inflation pressures could keep the Fed’s policy stance restrictive for longer, allowing the greenback to retain an upward bias against regional currencies,” he said.
In the Asian session on Friday, the dollar held near its highest levels of the past week after conflict in the Middle East pushed up oil prices and bond yields ahead of the release of US consumer inflation figures later in the day, Reuters reported.
The US dollar index, which measures the currency against six peers, was trading flat at 99.09, after rising 0.4% the previous day.
Thursday’s dollar rally followed the release of data showing US producer prices rose in August as energy prices rebounded during the month, boosting bets on US rate hikes.
Brent crude oil prices were set for their biggest weekly rise since July, at 10%, after Iran-aligned Houthis seized control of Yemen’s port city of Mocha and advanced down the Red Sea coast to strategic islands.
Energy prices dipped on Friday, with Brent down 2% at $105 a barrel after climbing to its highest level since May on Thursday close to $110.
Markets were awaiting the release of US consumer price index (CPI), one of the last major data points before the Federal Reserve meets this week.
A roiling global bond sell-off gathered pace again on Thursday as traders priced in more rate hikes around the world, pushing the benchmark 10-year US Treasury yield near the closely watched 5% level as investors also worried about high government debt levels.
For this week, the trader said the peso could test new record lows amid faster US CPI that reinforced Fed hike expectations, along with growing price pressures from the Middle East war.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the Fed’s Sept. 15-16 meeting will be a key trading driver for the market this week.
Markets are pricing in about an 86% chance of a 25-basis-point hike, compared with around 72% a day earlier, according to the CME’s FedWatch tool.
The trader sees the peso ranging from P62.50 to P62.90 against the dollar, while Mr. Ricafort expects it to move between P62.30 and P62.80. — Aaron Michael C. Sy with Reuters
