The Philippine peso held steady against the US dollar on Thursday, remaining at its all-time low as market participants closely monitored developments in the Middle East that could influence global oil prices and inflation expectations. The Philippines, as a net oil importer, is particularly sensitive to crude price swings, which ripple through the country's import bill and consumer inflation.

The currency closed at P61.75 per dollar on Thursday, unchanged from Wednesday's finish, according to data from the Bankers Association of the Philippines website. The peso opened the session marginally stronger at P61.74 before trading within an extremely narrow band — its intraday high reached P61.72, while its weakest level matched the closing rate of P61.75.

Trading volume expanded, with dollars exchanged rising to $1.532 billion from $1.269 billion in the previous session.

"The dollar-peso closed flat and traded within a tight range as players waited for stronger catalysts," a trader said by phone, noting that markets adopted a wait-and-see stance on the evolving Middle East situation.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the peso remained unchanged despite surging global crude oil prices that heightened expectations of a US Federal Reserve rate hike. He attributed the stability to likely intervention by the Bangko Sentral ng Pilipinas (BSP) aimed at smoothing market volatility. The BSP has periodically intervened in foreign exchange markets to curb excessive volatility, using its gross international reserves as a buffer.

The trader also noted that the approaching import season, which typically bolsters dollar demand, may have weighed on the peso.

If global oil prices reach $120 per barrel, the peso could breach the P61.75 support level and set new lows, the trader cautioned, potentially prompting further BSP intervention.

For Friday, the trader projected the peso to move within a P61.72 to P61.75 range against the dollar, while Mr. Ricafort forecast a broader trading band of P61.60 to P61.80.

Oil prices reached their highest levels in more than a month on Thursday, extending gains for a fifth consecutive session as escalating hostilities between the United States and Iran fueled concerns over potential supply disruptions along critical transit routes, Reuters reported.

Brent crude futures climbed $3.80, or 4%, to $97.87 a barrel by 0744 GMT — their highest level since June 3. US West Texas Intermediate crude rose $2.80, or 3.2%, to $89.63, after touching its highest point since June 11.

Iran's Revolutionary Guards reported that an oil tanker caught fire following an explosion while attempting to navigate a mined route in the southern Strait of Hormuz near the coast of Oman, and that two other vessels had turned back. The Guards declared the strait under their control and "completely closed" while US military actions continue in the region, warning that no tanker would be permitted to enter or leave without coordination with Iranian authorities. The Strait of Hormuz is one of the world's most critical oil transit chokepoints, through which roughly a fifth of global crude consumption routinely passes, making any disruption there a flashpoint for energy markets worldwide.

In broader currency markets, the dollar slipped against the euro ahead of the European Central Bank's policy meeting on Thursday while reaching a fresh 40-year high against the Japanese yen. Investors remained focused on the deepening Middle East conflict.

The greenback drew support as markets scaled back expectations for US interest rate cuts, with the American economy's relatively lower vulnerability to energy shocks reinforcing demand for the dollar at the expense of both the euro and the yen.

The dollar index, which measures the currency against a basket including the euro and the yen, eased 0.08% to 101.06. The euro was last up 0.09% at $1.1423.

— Aaron Michael C. Sy with Reuters