THE PESO climbed against the greenback on Thursday with tensions between US and Iran seen to have somehow subsided.
The local unit closed at P50.651 a dollar on Thursday, strengthening by 10.50 centavos from its P50.756 finish on Wednesday, according to data from the website of the Bankers’ Association of the Philippines.
The peso opened at P50.65 against the greenback. Its weakest showing was at P50.74, while its strongest was at P50.525 a dollar.
Dollars traded dropped to $1.582 billion from $1.963 billion on Wednesday.
A trader and an analyst attributed the local unit’s appreciation to risk-on sentiment due to news that geopolitical tensions in the Middle East have subsided.
“The peso strengthened as Middle East tensions eased after Iran intended not to engage in a war and after US President [Donald J.] Trump was reported to unlikely use any further military retaliation,” a trader said in an e-mail.
Reuters reported that Mr. Trump said it is not necessary for the US to hit back after Iran’s attack on US troops stationed in Iraq as part of Tehran’s retaliation for the killing of their military commander Qassem Soleimani.
Mr. Trump assured that no Americans were hurt and that there was no major damage to the missile launches of Iran that targeted their base in Iraq.
“The fact that we have this great military and equipment, however, does not mean we have to use it. We do not want to use it. American strength, both military and economic, is the best deterrent,” Mr. Trump said.
Meanwhile, Iran’s Foreign Minister Mohammad Javad Zarif said that their strikes in the Iraq base of American troops “concluded” their response to Mr. Soleimani’s death.
“We do not seek escalation or war, but will defend ourselves against any aggression,” Mr. Zarif wrote on Twitter.
UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the market largely responded to a potential “de-escalation” of hostilities between Tehran and Washington.
“The peso seem to have moved sideways but still from a position of strength, with no apparent major mover in today’s trading,” he said in a text message on Thursday.
For today, the trader expects the local unit to trade at around P50.60-50.80 per dollar, while Mr. Asuncion set a forecast range of P50.50-50.80. — LWTN with Reuters