The Philippine peso weakened against the US dollar on Monday, ending a three-day winning streak as escalating conflict in the Middle East pushed global crude oil prices higher and renewed inflation concerns.
The local currency fell by 9.9 centavos to close at P61.686 per dollar, down from P61.587 on Friday. Trading volume dropped sharply to $670.5 million from $1.087 billion in the previous session.
The peso opened weaker at P61.65 and traded as low as P61.71 intraday, moving close to its record-low close of P61.75. Market analysts attributed the decline to heightened geopolitical tensions that drove oil prices upward.
Benchmark Brent crude touched more than one-month highs amid fears of supply disruption through the Strait of Hormuz. Brent later eased to $87.96 a barrel, while US West Texas Intermediate crude slipped to $81.99, after Iran signaled possible negotiations with the United States.
The dollar held broadly steady as traders remained cautious over the conflict's trajectory. The dollar index edged down 0.1% to 100.72 against a basket of six major currencies.
Hostilities between the US and Iran have intensified following the collapse of an interim ceasefire signed a month ago. The struggle for control over the Strait of Hormuz has disrupted energy flows and stoked fears of broader global inflation.
Central bank intervention may have limited the peso's losses, with resistance observed around the P61.60 to P61.70 range. The central bank has said it periodically enters the foreign exchange market to curb sharp, inflationary currency swings.
For the next session, the peso is expected to trade between P61.50 and P61.75 as markets track Middle East developments. Analysts see near-term movement constrained within a P61.55 to P61.75 band.
