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THE PESO could return to the P61 level versus the dollar this week amid continued volatility in the Middle East (ME), with markets awaiting Iran’s response to the United States’ latest proposal to end the war.

On Friday, the local unit closed at P60.613 against the greenback, declining by 19.3 centavos from its P60.42 finish on Thursday, according to Bankers Association of the Philippines data posted on its website.

Week on week, however, it was up by 87.3 centavos from its P61.485 close on April 30.

The peso was weaker on Friday amid renewed tensions between the US and Iran, a trader said by telephone.

A rise in global crude oil prices after the clashes near the Strait of Hormuz also supported the greenback, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The dollar eased in the US session on Friday, set for a second straight weekly fall as investors stayed cautiously optimistic about a swift end to the Middle East conflict, after President Donald J. Trump said the ceasefire remained in place despite renewed US-Iran hostilities, Reuters reported.

Analysts said investors were taking heart from the fact that while oil prices were higher, a fragile ceasefire broadly held.

The dollar index measured against key peers fell 0.4% to 97.877, after hitting 97.623 earlier this week, its lowest level since Feb. 27, a day before the war started. It was set for a weekly drop of 0.3% after falling about as much the previous week.

Investors, who had flocked to the safe-haven dollar and sold currencies of oil import-dependent economies such as Japan and the euro area after oil prices surged following Iran’s effective closure of the Strait of Hormuz, drifted toward riskier currencies in recent weeks as hopes grew for a resolution to the Iran conflict.

For this week, the trader said the local unit could move depending on Iran’s response to the US’ proposal to end the war and possibly sink bank to the P61 range if there are negative news.

Both the trader and Mr. Ricafort see the peso moving between P60.40 and P60.90 per dollar this week as players, with activity to hinge on developments in the Middle East.

Relative calm prevailed around the Strait of Hormuz early on Sunday after days of sporadic flare-ups, as the United States waited for Iran’s response to its latest proposals to end more than two months of fighting and begin peace talks, Reuters reported.

US Secretary of State Marco Rubio said on Friday that Washington expected a response within hours. But there have been no signs of movement from Tehran on the proposal, which would formally end the war before talks on more contentious issues, including Iran’s nuclear program.

Mr. Rubio met Qatari Prime Minister Mohammed bin Abdulrahman al-Thani in Miami on Saturday and discussed the need to continue working together “to deter threats and promote stability and security across the Middle East,” the State Department said in a statement, which did not mention Iran.

With Mr. Trump due to visit China this week, there has been mounting pressure to draw a line under the war, which has ignited a global energy crisis and poses a growing threat to the world economy.

Tehran has largely blocked non-Iranian shipping through the narrow strait, which before the war carried one-fifth of the world’s oil supply.

On Friday, there were sporadic clashes between Iranian forces and US vessels in the strait, Iran’s semi-official Fars news agency reported.

Mr. Trump said on Thursday the ceasefire was holding despite the flare-ups, while Iran accused the US of breaching it. — Aaron Michael C. Sy with Reuters

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