Peso sinks back to P58 level on Middle East conflict

THE PESO slid back to the P58 level on Monday as the widening conflict in the Middle East drove safe-haven demand for the dollar and drove up oil prices, stoking inflation worries.

The local unit fell by 53.5 centavos to close at P58.20 against the greenback from its P57.665 finish on Friday, data from the Bankers Association of the Philippines showed.

This was its worst close in nearly three weeks or since Feb. 11’s P58.29. This was also the peso’s largest single-day drop since Sept. 25, 2025, when it lost 63.9 centavos.

The currency opened Monday’s trading session weaker at P57.85 per dollar, which was already its intraday high. Its worst showing for the day was its finish of P58.20 versus the greenback.

Dollars traded jumped to $2.24 billion from $1.504 billion on Friday.

“The dollar-peso closed higher over the escalating war in the Middle East following the recent drone attacks,” the first trader said in a phone interview.

“The peso weakened significantly amid safe-haven demand by market participants following US’ offensive on Iran and the death of the Iranian Supreme Leader,” the second trader said in an e-mail.

For Tuesday, the first trader said the peso could weaken further and trade between P58.10 and P58.50, while the second trader sees it ranging from P58.10 to P58.35.

“The local currency might remain weak as the spike in global crude oil prices could also exert downward pressure on the peso,” the second trader said.

Oil prices surged, the dollar jumped and shares slid on Monday as military conflict in the Middle East looked set to last for weeks, threatening to upend a global economic recovery and perhaps reignite inflation, Reuters reported.

Brent jumped around 10% to $79.90 a barrel, though it had briefly topped $82.00 at one stage, while US crude climbed 8.2% to $72.64 per barrel. Safe-haven gold rose 2.6% to $5,413 an ounce.

Israel launched new airstrikes targeting Tehran and expanded its military campaign to include attacks on Iran-backed Hezbollah militants in Lebanon on Monday, as US President Donald J. Trump signaled the US-Israeli military assault on Iranian targets could continue for weeks.

Meanwhile, Iran’s state media said a new wave of missiles was being launched from central parts of Iran towards “enemy locations.”

All eyes were on the Strait of Hormuz, through which around a fifth of the world’s seaborne oil trade flows and 20% of its liquefied natural gas. While the vital waterway has not yet been blocked, marine tracking sites showed tankers piling up on either side of the strait, wary of attack or maybe unable to get insurance for the voyage.

A prolonged spike in oil prices would risk reigniting inflationary pressures globally, while also acting as a tax on business and consumers that could dampen demand.

In currency markets, the euro and pound were each down around 1% at $1.1704 and $1.3347 respectively.

The dollar was by far the biggest gainer, rallying even on safe havens such as the Swiss franc and Japanese yen. It climbed 0.6% on the Japanese yen and 0.5% on the Swiss franc to ¥157 and 0.7733 francs.

The dollar’s traditional role as a global safe-haven currency had been challenged by erratic US policymaking. The energy moves were also relevant for currency markets given the US is a net energy exporter while both Europe and Japan rely heavily on imports. — Aaron Michael C. Sy with Reuters