Peso surges as Trump says Iran talks underway

The peso recovered to the PHP 59-per-dollar level on Tuesday as markets saw some relief after US President Donald J. Trump claimed they were already in talks with Iran for a possible end to the war.

The local unit surged by 35 centavos to close at PHP 59.95 against the greenback from its record-low PHP 60.30 finish on Monday, data from the Bankers Association of the Philippines showed.

The peso opened Tuesday’s trading session stronger at PHP 59.90 per dollar. It traded better than Monday’s close the entire session as its intraday best was at PHP 59.68, while its weakest showing was at just PHP 60.15 against the greenback.

Dollars traded ballooned to USD 2.69 billion from USD 1.65 billion on Monday.

“The dollar-peso closed lower on a sense of de-escalation in the US-Iran war,” a trader said by phone.

The peso rose as the dollar was mostly weaker overnight after Mr. Trump rescinded his threats against Iran and signaled progress on peace talks, which also helped lower global oil prices, Rizal Commercial Banking Corp. Michael L. Ricafort said in a Viber message.

For Wednesday, the trader sees the peso moving between PHP 59.70 and PHP 60.20 per dollar, while Mr. Ricafort expects it to range from PHP 59.85 to PHP 60.10.

The dollar firmed slightly on Tuesday as investor sentiment turned cautious, with the war in the Middle East raging on and markets skeptical of a swift resolution even though Mr. Trump delayed the bombing of Iran’s power grid, Reuters reported.

Mr. Trump wrote on his Truth Social platform that the US and Iran had held “very good and productive” conversations about a “complete and total resolution of hostilities in the Middle East.” Iran denied it had engaged in any direct negotiations.

The contrasting comments and a fresh wave of fighting left markets in flux as traders weighed Mr. Trump’s post in which he postponed the bombing for five days. Still, markets were mindful of the war all but halting shipments of about one-fifth of the world’s oil and liquefied natural gas through the Strait of Hormuz.

Oil prices edged higher after plunging more than 10% on Monday, with Brent crude futures retopping $100.94 a barrel on supply concerns.

The dollar index, which measures the US currency against a basket of peers, rose 0.2% to 99.387 after dipping 0.4% to near a two-week low on Monday.

The index has strengthened 1.8% this month, on track for its strongest monthly gain since October, as the conflict fueled safe-haven demand and resulted in traders no longer fully pricing a rate cut this year from the US Federal Reserve. — A.M.C. Sy with Reuters