THE PESO rose further to hit a fresh one-year high on Tuesday as the dollar remained weak due to tensions between the United States and Iran.

The local unit closed at P51.365 versus the greenback yesterday, 2.5 centavos stronger than its P51.39-per-dollar finish last Monday.

This was the peso’s best showing in more than a year or since it closed at P51.31 against the dollar on Feb. 8, 2018.

The peso opened the session at P51.33 per dollar. Its intraday high stood at P51.29 versus the greenback, while its worst showing was at P51.42 against the US currency.

Dollars traded climbed to $771.92 million from the $732 million that switched hands the previous session.

“The dollar-peso traded sideways. We still saw a weak dollar given the tensions between US and Iran,” a trader said in a phone interview.

US President Donald Trump targeted Iranian Supreme Leader Ayatollah Ali Khamenei and other top Iranian officials with sanctions on Monday, taking a dramatic, unprecedented step to increase pressure on Iran after Tehran’s downing of an unmanned American drone.

With tensions running high between the two countries, Mr. Trump signed an executive order imposing the sanctions, which US Treasury Secretary Steven Mnuchin said would lock billions of dollars more in Iranian assets.

Iran would not accept talks with the United States while it is under the threat of sanctions, Iranian ambassador to the United Nations, Majid Takht Ravanchi, told reporters at the United Nations.

The trader added that the peso strengthened in the morning session on increased risk appetite among investors amid optimism on the upcoming trade negotiations between Mr. Trump and Chinese President Xi Jinping on the sidelines of G20 summit in Osaka, Japan later this week.

“In the afternoon session, we saw buying of the dollar after heavy selling in the morning. I think this was position covering, given (US Federal Reserve) Chair (Jerome) Powell will speak tonight to discuss views on their monetary policy and economic outlook for the US,” the trader added.

At its June 18-19 meeting, the Fed’s policy-setting Federal Open Market Committee kept interest rates unchanged but hinted possible rate cuts before yearend. The Fed said it would continue to “act as appropriate” amid market uncertainties.

For today, the trader expects the peso to trade between P51.20 and P51.50, while another trader gave a P51.20-P51.40 range.

“The peso might remain strong amid optimism ahead of the G20 summit this week and the lingering dovish expectations to US Federal Reserve and BSP (Bangko Sentral ng Pilipinas) monetary policies in the succeeding months,” the second trader said in an e-mail. — Karl Angelo N. Vidal with Reuters