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THE PESO tumbled anew against the dollar on Monday, plunging to a fresh three-month low amid market fears over an escalation in the Middle East conflict as Iran threatened to retaliate after the United States attacked its nuclear sites over the weekend.

The local unit closed at P57.58 versus the greenback, sinking by 41 centavos from its P57.17 finish on Friday, Bankers Association of the Philippines data showed.

This was the its worst close in nearly three months or since it finished at P57.69 against the dollar on March 26.

The peso opened Monday’s session weaker at P57.25 against the dollar, which was already its intraday best. It dropped to as low as P57.655 versus the greenback during the session.

Dollars exchanged dropped to $1.28 billion on Monday from $1.77 billion on Friday.

“The dollar-peso closed higher as demand for safe havens favored the dollar amid the escalating conflict in the Middle East after the US joined the war, attacking Iranian nuclear sites,” a trader said in a phone interview.

The peso sank after oil prices touched five-month highs early in Monday’s session and as markets braced for Iran’s response to the US’ attacks, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message. The Philippines is a net importer of oil.

For Tuesday, the trader expects the peso to move between P57.40 and P57.80 per dollar, while Mr. Ricafort sees it ranging from P57.45 to P57.75.

The US dollar firmed on Monday as nervy investors sought safety, although the restrained moves suggest markets were waiting for Iran’s response to US attacks on its nuclear sites that have exacerbated conflict in the Middle East, Reuters reported.

Iran said on Monday that the US attack on its nuclear sites expanded the range of legitimate targets for its armed forces and called US President Donald J. Trump a “gambler” for joining Israel’s military campaign against the Islamic Republic.

The major moves were in the oil market, with crude prices hitting a five-month high, before dipping to trade lower on the day.

The dollar firmed 1% against the yen and was last at 147.450, at its highest level since May 15. The dollar index, which measures the US currency against six other units, was 0.15% higher at 99.065.

Iran vowed to defend itself a day after the US dropped 30,000-pound bunker-buster bombs onto the mountain above Iran’s Fordow nuclear site. American leaders urged Tehran to stand down while pockets of anti-war protests emerged in US cities.

In a step towards what is widely seen as Iran’s most effective threat to hurt the West, its parliament approved a move to close the Strait of Hormuz. Nearly a quarter of global oil shipments pass through the narrow waters that Iran shares with Oman and the United Arab Emirates.

While the dollar has reprised its role as a safe haven due to the rapid spike in geopolitical risks, the relatively muted moves suggest investors remain wary of going all in on the greenback.

The US currency has dropped 8.6% this year against its major rivals as economic uncertainty from Mr. Trump’s tariffs and concern over their impact on US growth led investors to scurry for alternatives. — A.M.C. Sy with Reuters

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