Peso climbs on easing tensions
THE PESO recovered against the dollar on Monday following easing tensions between Israel and Iran.
The local unit closed at P57.54 per dollar on Monday, strengthening by 11 centavos from its P57.65 finish on Friday, Bankers Association of the Philippines data showed.
The peso opened Monday’s session stronger at P57.555 against the dollar. Its intraday best was at P57.41, while its weakest showing was at P57.60 versus the greenback.
Dollars exchanged went down to $1.16 billion on Monday from $1.85 billion on Friday.
“The peso appreciated amid easing market concerns on the military conflict between Iran and Israel,” a trader said in an e-mail.
The easing tensions between Israel and Iran resulted in global crude prices reaching three-week lows, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Iran said on Friday that it had no plan to retaliate following an apparent Israeli drone attack within its borders, which in turn followed an unprecedented Iranian missile and drone attack on Israel days before, Reuters reported.
Crude oil fell as traders put the focus back on fundamentals with a rise in US stockpiles as the backdrop
Brent futures fell 137 cents or 1.56% to $85.92 a barrel.
The dollar held steady against the euro and the yen on Monday after the most volatile week of trading for the currency market in months, as investors assessed policy and geopolitical developments.
The market is laser-focused on the yen ahead of the Bank of Japan’s policy review on Friday.
The yen traded around 154.69 per dollar, a whisker away from last week’s 34-year low of 154.79 and close enough to the 155-level that is next on traders’ radars for possible intervention by Japanese authorities.
The dollar’s trade-weighted index was above 106, but off the five-month highs hit last week after comments from Federal Reserve officials and a run of hotter-than-expected inflation data forced a paring back of rate cut expectations.
A cooling in Middle East tensions, which had driven the dollar, gold and crude oil prices sharply higher on Friday and battered stock markets, also helped temper volatility.
The dollar has scorched higher against a range of currencies and yet the yen has been the worst performing major this year, with losses mounting to 9%.
The rethink on Fed easing has led to a general repricing of global rate cut timelines, but expectations for the European Central Bank and the Bank of England to start cutting by mid-year are still intact.
For Tuesday, the trader said the peso could gain further ahead of likely strong data out of the eurozone.
The trader sees the peso moving between P57.40 and 57.65 on Tuesday, while Mr. Ricafort expects it to range from P57.40 to P57.60 per dollar. — A.M.C. Sy with Reuters