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THE PESO depreciated to an over two-month low against the dollar on Tuesday as sentiment stayed dour due to the conflict between Iran and Israel.

The local unit sank to P56.70 per dollar on Tuesday, down by 28.5 centavos from its P56.415 finish on Monday, Bankers Association of the Philippines data showed.

This was the peso’s weakest finish in more than two months, or since its P56.80-a-dollar close on April 16.

The peso opened Tuesday’s session weaker than Monday’s close at P56.45 against the dollar, which was already its intraday best. Its worst showing was at its closing level of P56.70 versus the greenback.

Dollars exchanged decreased to $1.2 billion on Tuesday from $1.3 billion on Monday.

The peso extended its slide as the dollar was generally stronger against Asian currencies on Tuesday due to market caution over the Israel-Iran conflict, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The peso weakened anew as geopolitical tensions between Israel and Iran continued to drive safe-haven demand for the greenback,” a trader likewise said in an e-mail.

Against a basket of currencies, the dollar was little changed at 98.14, Reuters reported.

The White House said on Monday that US President Donald J. Trump is leaving the Group of Seven summit in Canada a day early due to the situation in the Middle East, as the president has requested that the national security council be prepared in the situation room.

Mr. Trump had earlier urged everyone to immediately evacuate Tehran and reiterated that Iran should have signed a nuclear deal with the United States.

The peso also weakened ahead of the expected rate cut by the Bangko Sentral ng Pilipinas (BSP) on Thursday, Mr. Ricafort said.

A BusinessWorld poll showed that 15 out of 16 analysts said the Monetary Board is likely to reduce the policy rate by 25 basis points (bps) to 5.25% from the current 5.5% this week.

The BSP has reduced borrowing costs by a total of 100 bps since it started its easing cycle in August last year.

For Wednesday, the trader said the peso could rebound on expectations of weak US retail sales data overnight.

The trader expects the peso to move between P56.55 and P56.80 per dollar, while Mr. Ricafort sees it ranging from P56.60 to P56.80. — A.M.C. Sy with Reuters

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