The Philippine peso is at risk of depreciating past the 64-per-dollar level if tensions in the Middle East escalate and oil prices increase, according to MUFG Global Markets Research. The bank's baseline outlook suggests a gradual strengthening to 61 per dollar, contingent on de-escalation of conflicts and a weaker US dollar. However, it flagged potential depreciation to the 62 to 64.50 range if geopolitical tensions rise. The peso recently strengthened slightly, closing at 61.675 after reaching an intraday low of 61.75. The Philippines' current account deficit positions it as more vulnerable compared to other Asian currencies. Despite the Bangko Sentral ng Pilipinas (BSP) raising its key interest rate to 4.5%, the peso's decline continues to pose mixed effects, benefiting exporters while increasing imported inflation. BSP Governor Eli Remolona noted the possibility of further rate hikes to combat inflation, with MUFG predicting an increase to 5.25%. The bank also highlighted signs of increased government spending following previous slowdowns.