Peso weakens to five-month low

THE PESO sank to a five month-low against the dollar on Monday as escalating conflict in the Middle East led to safe-haven demand and higher global oil prices.

The local unit closed at P56.808 per dollar on Monday, weakening by 27.8 centavos from its P56.53 finish on Friday, Bankers Association of the Philippines data showed.

This was the peso’s weakest close in more than five months or since its P56.955-per-dollar finish on Oct. 27, 2023.

The peso opened Monday’s session weaker at P56.65 against the dollar, which was already its intraday best. Its worst showing was at P56.845 versus the greenback.

Dollars exchanged jumped to $1.59 billion on Monday from $1.08 billion on Friday.

“The peso weakened significantly amid safe-haven demand following the direct Iranian bombing in Jerusalem,” a trader said in an e-mail.

The conflict in the Middle East led to a generally stronger dollar and elevated global crude prices on Monday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The dollar was steady on Monday, holding its biggest weekly gain since 2022, as the prospect of stubbornly high US interest rates and escalating conflict in the Middle East gave support, Reuters reported.

Iran had warned of a strike on Israel and over the weekend launched over 300 drones and missiles in retaliation for what it said was an Israeli attack on its Damascus consulate. The unprecedented drone and missile volley caused only modest damage and Iran said it now “deemed the matter concluded”.

The dollar index, which measures the currency against a basket of six others, was last little changed at 105.92, just below Friday’s 5-1/2 month high of 106.11.

For Tuesday, the trader said the peso could recover against the dollar on expectations of profit taking.

The trader sees the peso moving between P56.65 and P56.90 per dollar on Tuesday, while Mr. Ricafort expects it to range from P56.70 to P56.90. — A.M.C. Sy with Reuters