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Philippine peso nears Php17 against UAE dirham following latest Iran attacks
The Philippine currency also hit another record low at Php61.57 against the US dollar. Peso's continued weakness is driven by external pressures and gap between foreign currency demand and supply
- PUBLISHED: Tue 5 May 2026, 12:58 PM
[Editor's Note: Follow the Khaleej Times live blog for the latest regional developments with the US-Israel-Iran ceasefire now in effect.]
The Philippine peso is nearing the P17 benchmark against the UAE dirham, trading at Dh16.7 midday Tuesday, May 5, a day after renewed Iranian attacks on the UAE.
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The Philippine currency also hit another record low at end of Monday’s trading, closing at P61.57 against the US dollar and making it even harder for the Philippines to deal with higher importation requirements such as fuel.
The Philippine central bank (Bangko Sentral ng Pilipinas - BSP) acknowledged that the peso's continued weakness is primarily driven by external pressures, as well as a significant gap between foreign currency demand and supply.
Such demand is characterised by surging global oil prices due to the ongoing Middle East conflict, dramatically increasing the Philippines' import bill. Since nearly 98 per cent of the country's petroleum requirements are imported, this causes a "spike" in dollar demand to pay for these energy needs.
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Philippine finance authorities also cited an “unusually strong” dollar as US federal reserve officials have kept interest rates high, attracting capital away from emerging markets like the Philippines and toward US assets.
Demand for the greenback
Geopolitical tensions have also fueled "safe-haven" demand for the greenback, further strengthening the dollar against the peso, the experts said.
In March 2026, the Philippines reported a trade deficit of $4.5 billion, increasing the drain of dollars from the economy.
The BSP noted that demand for dollars from import payments, debt servicing, and other foreign currency obligations is rising faster than the supply supported by remittances and exports.
It said that the country is managing “excessive volatility,” more so over potential moderation in domestic economic growth.
Worst inflation in 3 years
Meanwhile, the Philippine Statistics Authority on Monday announced a whopping 7.2 per cent inflation rate for the month of April, exceeding earlier predictions of 6.3 per cent.
It means that the current crisis bypassed efforts by the Philippine Monetary Board to tame inflation and support the currency by raising key policy rate to 4.5 per cent last April 22.
The Philippines posted a modest 2 per cent inflation rate in January and 2.4 per cent in February before the start of the US-Israel-Iran war.
Skyrocketing fuel prices, energy rates and food items are seen as the key drivers in the rise in inflation.
The country’s inflation rate is the highest since March 2023.