Peso down on dollar purchases after Israel rejects ceasefire

Aaron Michael C. Sy, Reporter

THE PHILIPPINE peso weakened on Tuesday on safe-haven purchases of the dollar amid escalating tensions between Israel and Hamas.

It lost 0.1 centavo to close at P57.221 against the dollar, according to Bankers Association of the Philippines data posted on its website.

The peso opened at P57.27 against the dollar, strengthened to as much as P57.21 and weakened to as much as P57.29.

Dollars exchanged rose to $1.17 billion from $1.04 billion on Monday.

“The peso slightly weakened from a safe-haven reaction after reports that Israel had rejected a ceasefire deal with Hamas,” a trader said in an e-mail.

Palestinian militant group Hamas on Monday agreed to a Gaza ceasefire proposal from mediators, but Israel said the terms did not meet its demands and pressed ahead with strikes in Rafah, while planning to continue negotiations on a deal, Reuters reported.

The developments in the seven-month-old war came as Israeli forces struck Rafah on Gaza’s southern edge from the air and ground and ordered residents to leave parts of the city, which has been a refuge for more than a million displaced Palestinians.

Hamas said in a statement that its chief, Ismail Haniyeh, informed Qatari and Egyptian mediators that the group had accepted their proposal for a ceasefire.

Israeli Prime Minister Benjamin Netanyahu’s office said later that the truce proposal fell short of Israel’s demands, but Israel would send a delegation to meet with negotiators to try to reach a deal.

Qatar’s Foreign Ministry said its delegation would head to Cairo on Tuesday to resume indirect negotiations between Israel and Hamas.

The peso was also dragged by a slight pickup in inflation, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

Inflation quickened for a third straight month to 3.8% in April from 3.7% in March. It was 6.6% a year ago.

April inflation was within the Bangko Sentral ng Pilipinas’ 3.5-4.3% forecast and below the 4.1% median estimate of 16 analysts in a BusinessWorld poll last week.

The trader expects the peso to recover on Wednesday due to optimism ahead of the report on first-quarter Philippine economic growth

The trader sees the peso moving between P57.05 and P57.30 a dollar, while Mr. Ricafort expects it to range from P57.10 to P57.30.