Peso weakens to near two-month low as Iran, Israel exchange attacks
THE PESO sank to a near two-month low against the dollar on Monday as the conflict between Israel and Iran continued to escalate.
The local unit closed at P56.415 per dollar on Monday, weakening by 20.5 centavos from its P56.21 finish on Friday, Bankers Association of the Philippines data showed. This was the peso’s weakest close in almost two months or since its P56.42 per dollar close on April 28.
The peso opened Monday’s session weaker at P56.25 against the dollar, which was already its intraday best. Its worst showing was at P56.61 versus the greenback.
Dollars exchanged decreased to $1.3 billion from $1.71 billion on Friday.
“The dollar-peso traded higher on continued flight to safety amid worsening Israel-Iran tensions,” a trader said by phone.
The peso depreciated against the dollar on Monday amid higher global crude oil prices due to the worsening Middle East conflict, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
For Tuesday, the trader expects the peso to move between P56.20 and P56.65 per dollar, while Mr. Ricafort sees it ranging from P56.30 to P56.50.
The dollar held its ground in choppy trading on Monday, as investors keenly monitored Israel-Iran fighting for any signs that it could escalate into a broader regional conflict and braced for a week packed with central bank meetings, Reuters reported.
As both Iran and Israel showed no signs of backing off from their attacks, market participants mulled the prospect that Tehran might seek to choke off the Strait of Hormuz — the world’s most important gateway for oil shipping — which could raise broader economic risks from disruptions in the energy-rich Middle East.
Crude prices were up about 1% after closing 7% higher on Friday following Israel’s preemptive strike on Iran.
On Monday, the dollar was flat at 144.08 Japanese yen after rising nearly 0.4% earlier in the session, while the euro was muted at $1.1555. The greenback was also steady against the Swiss franc at 0.811, while an index that measures the dollar against six other currencies dipped 0.1% and was last at 98.11.
Geopolitical tensions were the latest twist for investors and central bank policymakers who have been trying to navigate economic uncertainty triggered by US President Donald J. Trump’s move to reshape the global trade order this year.
Despite the dollar’s broader rise in the past few sessions, analysts were less convinced that the trend could continue until there was more clarity on the tariff front.
The US currency has lost more than 9% in value this year as investors remain nervous over Mr. Trump’s deadline on trade deals due in about three weeks, while agreements with major trade partners including the European Union and Japan are yet to be signed.
Investors now will look for progress in any bilateral meetings with the US on the sidelines of a Group of Seven leaders meeting in Canada.
Among major currencies, the euro has emerged as a favorite this year with gains of about 11%, sparking speculation that it could challenge the US dollar’s dominant status. — Aaron Michael C. Sy with Reuters
