By Aaron Michael C. Sy, Reporter

THE PESO sank to a fresh record low against the US dollar on Thursday as volatile oil prices and heightened tensions in the Middle East overshadowed the Bangko Sentral ng Pilipinas’ (BSP) larger-than-expected rate hike.

The currency fell by 15.9 centavos to end at P63.52 versus the greenback from its previous record low of P63.361 on Wednesday, Bankers Association of the Philippines data showed.

This marked the peso’s 35th record low this year and its sixth so far in October. It was also the fourth straight trading day that the peso ended at a historic low.

Year to date, the peso has weakened by P4.73 or 7.45% from its P58.79 finish on Dec. 29, 2025.

The local unit opened Thursday’s session slightly stronger at P63.31 per dollar and hit an intraday best at P63.30.

Its worst showing for the day was at P63.545, which also marked the peso’s weakest level on record, beating its previous P63.373 trough also logged in the previous day.

Dollars traded rose to $1.716 billion from $1.34 billion in the previous day.

Analysts said persistent dollar demand and external pressures arising from escalating tensions in the Middle East weighed on the peso despite the BSP’s surprise 50-basis-point (bp) rate hike on Thursday.

“The peso’s weakness can be attributed to a strong US dollar amid uncertainty over US interest rates; high oil prices driven by Middle East tensions, which increase the Philippine import bill; and domestic vulnerabilities, including external deficits and persistent demand for dollars,” Ser Percival K. Peña-Reyes, a senior research fellow at the Ateneo Center for Economic Research and Development, said in a Viber message.

“External pressures are the main trigger, amplified by our reliance on imports.”

Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera also said in a Viber message that global uncertainty from the country’s widening balance of payments (BoP) deficit continues to weigh on investor sentiment and the country’s external position.

“Monetary tightening can help moderate depreciation but it cannot fully offset global dollar strength and structural external imbalances,” Mr. Rivera said.

The BSP on Thursday hiked the target reverse repurchase rate for a fourth straight meeting by 50 bps to an almost two-year high of 5.5%.

The first trader noted that growing domestic inflationary concerns could intensify the local currency’s weakness.

BSP Governor Eli Remolona, Jr. on Thursday expressed concern that the peso’s current weakness could be inflationary.

The second trader said by telephone that Mr. Remolona’s comments on foreign exchange intervention tactics dragged the local unit.

“We’re not hiking the policy rate to defend the peso. We do intervene a little bit in the foreign exchange market, but that’s mainly to avoid the swings in the exchange rate that tend to be inflationary. We have estimates of how much the peso has to move before it becomes inflationary, and that’s when we tend to intervene,” Mr. Remolona said in a press conference after the policy meeting.

Asked about the pass-through effect, Mr. Remolona said: “Forgive me if I don’t tell you the threshold, because then it helps speculators decide when to go in and when not to go in. But there is a threshold. Not every depreciation is inflationary. It has to be significant enough,” he said.

China Banking Corp. Chief Economist Domini S. Velasquez said in a Viber message that the peso’s sustained recovery will depend on restoring confidence in the domestic economy.

“Stronger economic fundamentals, faster growth, and greater business confidence will provide more lasting support for the peso,” she said.

Mr. Peña-Reyes added that the peso could reach the P64-per-dollar level in the near term, as it now only needs to weaken around 1% to reach that level.

“If oil stays expensive and the dollar strengthens, P64 could be tested within days or weeks. Easing geopolitical tensions or a weaker dollar could delay it,” he said.

The second trader also said that while the peso can still gain support from remittances in the last two months ahead of the holidays, its effect may not be pronounced compared with previous years due to external factors.

For Friday, the second trader sees the peso ranging from P63.40 to P63.80 against the dollar.