FX.co ★ Philippine Peso Moves Toward Record Low

The Philippine peso weakened to around 59 per US dollar in early March, nearing its record low as risk sentiment deteriorated amid the ongoing conflict in the Middle East. The crisis has driven oil prices higher, heightening risks for the Philippines, which is heavily dependent on fuel and food imports and is regarded as one of the region’s most vulnerable economies to inflation and growth shocks. Bangko Sentral ng Pilipinas Governor Eli Remolona cautioned that a rise in oil prices to $100 per barrel could necessitate tighter monetary policy if inflation breaches the central bank’s target, a move that could further weigh on an already underperforming economy. He also stressed that the central bank has limited scope to support growth and little inclination to intervene in the foreign-exchange market unless peso depreciation poses a threat to inflation. Consumer price inflation quickened to 2.4% in February, its fastest pace in more than a year, reinforcing concerns over mounting price pressures.