Peso back at PHP 58 level on hopes of de-escalation in Middle East conflict

The peso surged back to the PHP 58-a-dollar level on Tuesday after US President Donald J. Trump signaled that the Middle East conflict could end soon.

The local unit jumped by 60.4 centavos to close at PHP 58.896 against the greenback from its record-low PHP 59.50 finish on Monday, data from the Bankers Association of the Philippines showed.

The currency opened Tuesday’s trading session stronger at PHP 59.25 per dollar. It traded better than its previous close the entire session as its intraday high was at PHP 58.86, while its worst showing was at just PHP 59.345 versus the greenback.

Dollars traded fell to USD 2.027 billion from USD 2.597 billion.

“The peso recovered significantly in line with Asian peers after US President Trump hinted that its offensive on Iran might come to an end “very shortly,” a trader said in an e-mail.

The local unit followed the downward correction in global crude oil prices following Mr. Trump’s signal, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The dollar took a breather on Tuesday as investors swung between hopes for a de-escalation in the US-Israeli war on Iran and concerns that any such optimism could be premature, Reuters reported.

Mr. Trump said the war could end well before the timeline he initially laid out, but threatened to escalate attacks should Tehran block oil shipments from the Strait of Hormuz. In response, Iran’s Revolutionary Guards dismissed Mr. Trump’s remarks as “nonsense” and said the blockade would continue until attacks from the US and Israel end.

The safe-haven dollar weakened 0.1% to USD 1.1652 against the euro and 0.1% to 157.49 yen. The dollar index, which measures the greenback against a basket of six peers, fell 0.3% to a one-week low of 98.6.

Mr. Ricafort added that the peso rose as Malacañang said that the Bangko Sentral ng Pilipinas (BSP) is ready to intervene in the foreign exchange market after the currency logged a new all-time-low close on Monday amid the Middle East conflict.

BSP Governor Eli M. Remolona, Jr. has said that the central bank keeps a constant presence in the market, but only to help temper sharp currency swings.

The Palace earlier said that President Ferdinand R. Marcos, Jr. prefers to keep the peso-dollar exchange rate below the P60 mark. Malacañang has previously expressed concern that a sharp depreciation could raise the country’s debt service burden and push up import costs, particularly for energy, which would further fuel inflation.

For Wednesday, the trader said the peso could appreciate further ahead of a potentially soft US consumer inflation report for February.

Both the trader and Mr. Ricafort see the peso moving between PHP 58.75 and PHP 59 per dollar on Wednesday. — Aaron Michael C. Sy and Erika Mae P. Sinaking with Reuters