Philippine peso hits record low as oil prices and US dollar strength weigh on economy

The Philippine peso reached an all-time low of 62.71 to the US dollar, continuing a decline that began earlier this year and has erased roughly 6% of its value. The slide follows record oil price spikes after Iran shut the Strait of Hormuz, forcing the Philippines to spend more dollars on imported crude. Rising yields on US Treasury bonds have also drawn capital away from emerging-market currencies, adding to the peso’s weakness.

Analysts point to the country’s sizable fiscal and current-account deficits and inflation running above the central bank’s target as key drivers. While a weaker peso can boost exporters and tourism, it raises the cost of imported goods and fuels inflation, which stood at 6.1% in August. Remittances from overseas workers, amounting to a record $35.63 billion last year, provide some stability but do not fully offset the pressures.