Peso may drop further against dollar on escalating Iran-Israel conflict
THE PESO could weaken further against the dollar this week amid heightened geopolitical risks as Israel and Iran exchanged attacks.
The local unit closed at P56.21 per dollar on Friday, sinking by 32.5 centavos from its P55.885 finish on Wednesday, Bankers Association of the Philippines data showed.
This was the peso’s weakest finish in almost seven weeks or since its P56.42 close on April 28. This also marked the first time that the local unit ended at the P56 level since April 29’s P56.145-a-dollar close.
Week on week, the peso plummeted by 59 centavos from its P55.62 finish on June 5.
The peso depreciated against the dollar on Friday due to the fresh escalation in the conflict between Israel and Iran, a trader said in a phone interview.
The local unit dropped on Friday as global oil prices surged to near four-year highs after Israel’s attack, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The worsening of the situation in the Middle East could keep the peso at the P56 level this week, the trader said.
The trader sees the peso moving between P55.90 and P56.30 per dollar this week, while Mr. Ricafort expects it to range from P55.90 to P56.40.
The US dollar advanced against major currencies, including the euro and yen, on Friday as markets grabbed safe-haven assets as geopolitical tensions in the Middle East following an Israeli attack on Iran, Reuters reported.
In afternoon trading, the dollar gained 0.3% to 143.88 against the Japanese yen and rose 0.1% to 0.8110 franc against the Swiss currency, with the greenback on track to snap two straight sessions of losses against safe-haven currencies.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, climbed 0.5% to 98.2, snapping two straight sessions of losses. It was still set for a second consecutive week of losses.
Israel and Iran launched fresh attacks on each other overnight into Sunday, stoking fears of a wider conflict after Israel expanded its surprise campaign against its main rival with a strike on the world’s biggest gas field.
Tehran called off nuclear talks that Washington had said were the only way to halt Israel’s bombing, while Israeli Prime Minister Benjamin Netanyahu said the attacks were nothing compared with what Iran would see in the coming days.
The latest wave of Iranian attacks began shortly after 11:00 p.m. on Saturday (2000 GMT), when air raid sirens blared in Jerusalem and Haifa, sending around a million people into bomb shelters.
Around 2:30 a.m. local time (2330 GMT Saturday), the Israeli military warned of another incoming missile barrage and urged residents to seek shelter. Explosions echoed through Tel Aviv and Jerusalem as missiles streaked across the skies as interceptor rockets were launched in response. The military lifted its shelter-in-place advisory nearly an hour after issuing the warning.
US President Donald J. Trump had warned Iran of worse to come, but said it was not too late to halt the Israeli campaign if Tehran accepted a sharp downgrading of its nuclear program. — A.M.C. Sy with Reuters
