While the Philippine peso weakened amid the “more painful” impact of the United States (US)-Iran war, it has suffered smaller losses than the Indonesian rupiah and Indian rupee, not because of Manila’s closer ties with Washington but due to its lower reliance on volatile foreign capital inflows.
Singapore-based DBS Bank Ltd. identified four Asian currencies as the region’s “least resilient” against the US dollar. In a June 30 report, the bank said these were the Philippine peso, Indian rupee, Indonesian rupiah, and South Korean won.
According to foreign exchange (forex) data monitored by DBS, the peso depreciated by 3.8 percent in the first half of 2026, outperforming the rupee, which declined by 4.8 percent, Thai baht (5.5 percent), won (6.5 percent), and rupiah (6.6 percent). The Vietnamese dong, meanwhile, remained largely unscathed despite recent global developments.
DBS senior forex strategist Philip Wee and forex and credit strategist Chang Wei Liang said they highlighted the peso, rupee, rupiah, and won because these currencies have faced “persistent downward pressure in Trump 2.0,” referring to the second term of US President Donald Trump.
DBS said this year’s exchange of missile attacks between the US and Iran “inflicted more pain than Trump’s global tariffs last year.”
Trump imposed reciprocal tariffs on America’s trading partners, with Philippine exports briefly facing a peak tariff rate of 20 percent before it was reduced to 19 percent.
Tariffs on Philippine exports have since reverted to normal levels after the US Supreme Court struck down Trump’s reciprocal tariffs. However, the Philippines still faces the risk of an additional tariff of up to 12.5 percent due to an ongoing forced labor investigation.
“Tariffs were a trade-growth shock, while Iran was an energy, inflation, and balance-of-payments (BOP) shock,” DBS said.
While tariffs mainly disrupted trade and growth, DBS said the US-Iran conflict exposed Asia’s “weakest link”—its dependence on external energy supplies. Military hostilities over the past four months have threatened shipping through the Strait of Hormuz, a critical route that handles about one-fifth of global oil shipments. The Philippines imports nearly all of its oil requirements from the Gulf region.
The resulting pressure from higher energy costs, inflation, and BOP concerns pushed the peso beyond its previous three-year trading range of ₱55 to ₱59 against the US dollar. The local currency stood at ₱61.309:$1 as of late June.
Despite remaining among Asia’s “vulnerable” currencies, DBS said the peso has fared better than some regional peers because of its domestic financial structure rather than geopolitical alignment.
“We will not be hasty in concluding that markets are punishing the rupee and rupiah as full BRICS members or cutting the peso and won some slack as US allies,” DBS said.
BRICS is an intergovernmental organization comprising 11 major emerging economies: Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, Saudi Arabia, United Arab Emirates (UAE), and Indonesia.
DBS said India and Indonesia rely more heavily on volatile foreign portfolio inflows, while the Philippines benefits from more stable structural foreign exchange inflows.
“Overseas foreign worker (OFW) remittances act as natural absorbers of oil price shocks” in the Philippines, DBS said, noting that these cash sent home by OFWs provide a cushion for the peso when energy prices rise.
Looking ahead, DBS maintained a stable outlook for the peso, saying that as oil prices retreat toward pre-war levels, the local currency could recover some of its recent losses.
In particular, the Singaporean bank expects the peso to trade at ₱60.4 against the US dollar in the third quarter of 2026, ₱60.6 versus the greenback in the fourth quarter of this year, ₱60.7:$1 in the first quarter of 2027, ₱60.9 in the second quarter of next year, ₱61.1 in the third quarter of 2027, and ₱61.3 in the fourth quarter of next year.
“With the oil shock largely defused, capping off the energy-related bleeding, expect central banks, together with their currency stabilization measures, to find a more manageable equilibrium that flattens the depreciation trajectory of their currencies,” DBS said.
