The Philippine peso hit an all-time low on Monday, making the country one of the most affected in the world by the ongoing war in the Middle East.
The peso sank to P59.50 to a US dollar, surpassing the previous record low of P49.44 last January 14.
This came as the country scrambles to find new crude sources as the closure of the Strait of Hormuz threatens its slim two-month buffer supply of petroleum products.
Various local reports pointed to geopolitical tensions in the Middle East as a major contributor to the Peso’s value dive as it increases costs for Philippine energy imports.
The Bangko Sentral ng Pilipinas has yet to issue its explanation on the new low but it had previously signaled a willingness to tolerate some weakness in the peso to let market forces dictate the currency’s value.
It said it would intervene to manage extreme volatility.
Already weak currency
The joint US-Israel aggression and Iran’s defiant counter attacks came as the Ferdinand Marcos Jr.’s government missed its 2025 growth target for the third consecutive year.
Philippine GDP expanded by only 4.4%, significantly short of the already revised 5.5%–6.5% target for last year.
The slowdown was driven by a 3% Q4 growth rate that was the slowest non-pandemic rate in roughly 14 years.
The slide coincided with a major infrastructure corruption scandal involving the President himself, as well as typhoon-related disasters.
The slowdown produced a weakened Peso as the New Year rolled in, but again taking a hit from the ongoing Middle East crisis.
In New York where he delivered a speech on women’s equality at the United Nations, Marcos Jr. appeared hesitant to accept offers from both houses of the Philippine Congress of emergency powers to suspend taxes on oil products.
Marcos told reporters he would first study the legislative proposals before deciding to certify them urgent and accelerate their passage into law.
The Philippine government earned ₱373.7 billion from oil products excise taxes in 2022, an amount it is not willing to surrender even as prices of petroleum products are themselves threatening to hit all-time highs.
Starting today, oil retailers have started implementing staggered price hikes that would push gasoline, diesel and kerosene products to as much as ₱68.65, ₱84.75, and ₱122.67, respectively.
The hikes represent a 16% jump from last week’s pump prices, threatening parallel increases in electricity rates and prices of food items and other commodities.
‘Stop the theatrics’
Economist Sonny Africa of the group IBON Foundation criticized government’s response, saying Marcos’ crisis mitigating measures are just for show.
“Staggered price hikes are theater and just over a few days – and we’re meant to take the word of the oil firms and the government that these are fair and justified,” Africa said.
“[Marcos’] 4-day work weeks are also theater – saving barely 2-3% of total petroleum products consumption at best,” the London School of Economics-trained researcher added.
Africa said Marcos should suspend oil excise taxes to put ₱200-250 more per month in the pockets of the poorest consumers, aside from also helping those with fuel-intensive livelihoods.
But cutting both excise taxes and the value-added tax on all products would give the poorest consumers ₱2,800-3,000 or more per month, he added. # (Raymund B. Villanueva)
