Philippine Peso Hits Record Lows Amid Oil Surge

In Manila, the Philippine peso has plunged to record lows in early 2025, battered by surging global oil prices triggered by escalating conflict in the Middle East, prompting the government to declare a national energy emergency and placing the central bank in a precarious position as inflation risks mount.

The crisis intensified after strikes on Iran on February 28 led to the near-total closure of the Strait of Hormuz, a vital artery for Middle Eastern oil and gas exports. As a net importer of crude and refined products, the Philippines faces a sharply higher import bill, with Brent crude prices rising about 40 percent month-on-month in March. Diesel prices have surged to 115 pesos (about $1.92) per liter in some areas, forcing petrol stations in Metro Manila to manually adjust pumps unable to display three-digit figures. This has exacerbated transportation costs, rippling through supply chains to drive up prices for food, goods, and services.

Headline inflation is now projected to exceed the Bangko Sentral ng Pilipinas (BSP) target band of 2 to 4 percent as early as March, according to analysts at ING Bank. "While inflation is set to breach the target, raising the odds of a...