If external shocks—particularly surging oil prices—persist, the Philippine peso may face a longer path to recovery, with expectations that it could remain near its new all-time low of ₱60.1 per United States (US) dollar.

To note, close of ₱60.1 per dollar on Thursday, March 19, marks the first time the peso has weakened beyond the ₱60:$1 level in history, during the Marcos Jr. administration.

According to the Bankers Association of the Philippines (BAP), the local currency hit an intraday low of ₱60.4 and a high of ₱59.9, which was also its opening rate. Total trading volume jumped to $2.437 billion from Wednesday’s $1.777 billion.

Reyes Tacandong & Co. senior adviser Jonathan Ravelas said decline was the market’s reaction when Iran retaliated to the military attacks by the US-backed Israel.

This decline was a “knee-jerk reaction,” Ravelas said. “If this escalates we could see it staying above ₱60.”

Philippine Institute for Development Studies (PIDS) senior research fellow John Paolo Rivera said the continued slump of the peso mirrors the “intensifying external pressures rather than a sudden domestic shock.”

Rather than domestic challenges, Rivera said breaching ₱60:$1 could be blamed more on the global condition, especially the oil-related shocks and the sustained gains of the greenback.

He noted that the war-driven surge in global oil prices is boosting the Philippines’ dollar demand for imports, while the US dollar remains strong amid risk-off sentiment.

“As a net oil importer, the country is particularly exposed; oil above $100 has already been linked to peso weakness in recent weeks,” Rivera noted.

Echoing Ravelas’ view, Rivera said should these pressures remain, the peso could stay “near or above” ₱60:$1 over the coming months.

Echoing Ravelas’ view, Rivera and China Banking Corp. (Chinabank) chief economist Domini Velasquez said should these pressures remain, the peso could stay “near or above” ₱60:$1 over the coming months.

“Worsening geopolitical tensions are putting pressure on the peso, with risks tilted toward further depreciation if these persist,” Velasquez said, adding that the market’s expectation of the US Federal Reserve’s (Fed) hawkish policy stance will likely keep the greenback strong.

“A weaker peso could translate to higher domestic pump prices, adding to inflationary pressures,” Velasquez further said. Meanwhile, Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort sounded a tad optimistic about the foreign exchange (forex) developments.

Ricafort said the peso’s drop to a record low reflects normal supply and demand dynamics and some cautious hedging amid geopolitical risks. He explained that the country’s reliance on imported oil and energy also plays a role in hedging decisions.

Overall, volatility in the local forex market has eased, the economist noted, adding that the peso is “not really that far” from its usual ₱58-59:$1 range over the past six months.