The peso matched its historic low against the United States (US) dollar while local stocks retreated for a second consecutive session, as rising crude oil prices and escalating military conflict in the Middle East fueled domestic inflation concerns.

The local currency closed at ₱61.75 per dollar on Wednesday, July 22, matching its weakest intraday level and equaling the record trough previously recorded on May 19, according to market data provided by the Bankers Association of the Philippines (BAP).

The peso dropped from Tuesday’s settlement of ₱61.745. Trading opened at ₱61.73—which held as the currency’s strongest price point of the session—before mounting selling pressure forced a retest of its record low.

Renewed weakness in the peso was driven primarily by an appreciating greenback, which gained momentum alongside rising global crude oil prices caused by the re-escalation of hostilities between the US and Iran, according to Jonathan Ravelas, senior adviser at Reyes Tacandong & Co.

Ravelas projected the dollar-peso pair will trade within a range of ₱61.60 to ₱61.90 in the near term.

The rally in energy commodities has reignited domestic price fears in the import-dependent nation, where higher fuel costs quickly filter into broader consumer goods. A weaker peso amplifies landed costs for imported energy and staple foods, creating pass-through inflation that complicates monetary policy.

Economic think tank GlobalSource Partners Inc. cautioned that the combination of declining currency and record minimum wage increase in Metro Manila risks delaying government efforts to curb inflation.

Reflecting those macroeconomic headwinds, local equities also extended their decline as investors locked in profits following a four-day advance.

The Philippine Stock Exchange index fell 65.95 points, or 1.04 percent, to settle at 6,267.85 on Wednesday, July 22, marking a broader retreat across local capital markets.

Sectoral indices ended mixed, reflecting selective positioning among traders. Trading activity slowed compared to recent sessions, with volume dropping to 711 million shares valued at ₱6.49 billion. Decliners dominated the board, outnumbering advancers 105 to 89, while 48 issues closed unchanged.

Selling pressure was concentrated in major index heavyweights, led by port operator International Container Terminal Services Inc. (ICTSI), as market participants scrambled to lock in gains following a brief rally.

Macroeconomic headwinds from abroad further sapped buying appetite, leaving local shares vulnerable to international risk aversion.

“The local market extended its decline on the back of heavy profit taking on index heavyweight ICTSI,” said Japhet Tantiangco, research manager at Philstocks Financial. “The rise in global oil prices and the decline of the Peso to record lows amid the ongoing US-Iran war also weighed on market sentiment.”

The breach of key chart levels underscored mounting anxiety among institutional traders.

“The local bourse ended lower as investors turned cautious amid continued peso depreciation, prompting profit-taking across the market. The selling pressure pushed the benchmark index below the 6,300 level as sentiment remained subdued,” said Luis Limlingan, managing director at Regina Capital Development Corp.

He noted that market focus will remain firmly fixated on currency movements and broader global conditions over the near term.

The energy price shock threatens to spill over into domestic consumer prices. Michael Ricafort, chief economist at Rizal Commercial Banking Corp., cautioned that the recent military clashes between US and Iranian forces have elevated international crude prices, translating into immediate upward adjustments at local fuel pumps.

Higher transport and logistics expenses threaten to spark a broader pickup in headline inflation, potentially constraining consumer spending and complicating monetary policy expectations.