The Philippine peso weakened against the dollar on Thursday as global crude oil prices breached $100 per barrel, heightening concerns about inflation.

The currency declined by 2.2 centavos to close at P62.535 against the greenback, compared with P62.513 on Wednesday, according to data posted on the Bankers Association of the Philippines’ website.

The peso opened Thursday’s session slightly stronger at P62.50 per dollar, which was also its intraday high. It fell to as low as P62.58 during the session.

Dollar trading volume declined to $1.189 billion from $1.681 billion previously.

“The peso weakened after crude oil price reached the $100-per-barrel mark following the renewed escalation of tensions in the Middle East. This development fueled domestic inflationary concerns and could prompt further safe-haven demand for the greenback,” a trader said in a Viber message.

The local currency also came under pressure from elevated US Treasury yields after the US Treasury announced a lower-than-expected bond buyback plan, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For Friday, the trader expects the peso to move between P62.40 and P62.65 against the dollar. Mr. Ricafort sees the currency trading within a P62.45-to-P62.65 range.

Global markets were largely subdued on Thursday as investors assessed a renewed surge in oil prices and rising bond yields. The dollar found limited support ahead of inflation data that could influence expectations for the US Federal Reserve’s policy outlook, Reuters reported.

Brent crude futures remained firmly above $100 a barrel after breaking through that level on Wednesday. Iran and the United States engaged in the largest wave of attacks on shipping by both sides since the start of the war, raising concerns that disruptions to energy supplies from the Middle East could worsen.

The resulting energy-related inflation pressure pushed global bond yields higher again. Benchmark 10-year US Treasury yields reached their highest levels since 2023, while a buyback program involving longer-dated bonds also disappointed investors.

The dollar, however, received only marginal relief. After moving higher earlier in the session, it eased against major currencies. The euro and sterling edged up to $1.1639 and $1.3555, respectively.

The yen also remained firm near a seven-month high, rising about 0.1% to 153.35 ahead of an expected Bank of Japan rate hike next week.

The dollar index, which measures the greenback against a basket of currencies, surrendered its earlier gains and eased to 98.73.

“There’s a dynamic there where ultimately, safe-haven hedge policy is a dollar. It would be expected to have traded firmer, but it hasn’t happened,” said Richard Franulovich, head of FX strategy at Westpac Institutional Bank.

He said markets were becoming less sensitive to oil shocks as the war continued. Debasement trades, global central bank tightening and a more interventionist Treasury Department were also acting as drags on the dollar, he added, with those factors “washing through in the background.”

The European Central Bank is expected to raise interest rates on Thursday for the second time this year. It is also expected to signal that it is prepared to tighten policy further if the inflation outlook fails to improve.

The Bank of Japan is likewise expected to raise interest rates to 1.25% on Sept. 18 and then to 1.75% in the second quarter of 2027, earlier than previously expected, amid persistent concerns about broadening price pressures and yen weakness.

Market attention will turn to US inflation data, including producer prices later on Thursday and the consumer price index on Friday. These are the last major data releases scheduled before the Federal Open Market Committee meeting on Sept. 15 to 16.

Traders are now pricing in roughly a 60% chance of a Federal Reserve rate hike this month following Friday’s stronger-than-expected nonfarm payrolls report.

“While higher inflation may warrant tighter policy, additional rate hikes would also increase government borrowing costs at a time when fiscal deficits and debt servicing burdens are already under scrutiny,” said Lloyd Chan, senior currency analyst at MUFG.

— A.M.C. Sy with Reuters