The peso is struggling to claw back losses despite the two-week ceasefire between the United States (US) and Iran, remaining an outlier in a regional currency recovery as markets focus on the country’s acute sensitivity to energy prices.

While the brief cessation of hostilities sparked a relief rally across Asian markets, the Philippine peso remains more than three-percent weaker than its pre-conflict valuation. Analysts at MUFG Bank Ltd. suggested the gains seen in regional peers are masking deep-seated fragility, particularly as shipping disruptions persist in the Strait of Hormuz.

The peso, along with the Thai baht and South Korean won, continues to underperform as investors weigh the risks of a prolonged standoff in the Middle East.

The peso traded at 59.968 against the US dollar as of April 10, marking a 1.3 percent depreciation for the month amid growing divergence in the region.

Meanwhile, China’s yuan has managed a return to pre-conflict levels, oil-importing economies in Southeast Asia are finding the path to recovery significantly steeper.

MUFG noted in a Friday commentary that the rebound will remain fragile until energy supplies through critical maritime chokepoints return to pre-war norms.

The volatility presents a persistent headache for the Bangko Sentral ng Pilipinas. The central bank opted to maintain its key interest rate at 4.25 percent during a rare off-cycle meeting last month, a move intended to anchor inflation expectations even as economic growth begins to soften. Policymakers find themselves in tightening corner, where the need to support a cooling economy is offset by the necessity of defending the currency and curbing imported inflation.

MUFG analysts pointed out that while weak growth figures usually provide a catalyst for monetary easing, the BSP is constrained by limited fiscal space and lopsided inflation risks. The primary concern for the domestic economy is the “second-round” pass-through effect, where elevated energy costs eventually seep into the prices of basic necessities.