Peso down for sixth straight day on prolonged Iran conflict

The peso extended its losing streak against the dollar on Thursday as the conflict in the Middle East continues to rattle markets.

The local unit went down by six centavos to close at PHP 58.63 against the greenback from its PHP 58.57 finish on Wednesday, data from the Bankers Association of the Philippines showed.

This was its worst finish in a month or since it ended at PHP 58.69 a dollar on Feb. 5.

The peso opened Thursday’s trading session sharply stronger at PHP 58.40 per dollar. It climbed to an intraday best of PHP 58.335 but failed to hold on to its gains as it finished at its worst showing for the session.

Dollars traded went down to USD 1.57 billion from USD 1.774 billion on Wednesday.

The peso continued to slide against the greenback amid the prolonged Middle East conflict and its impact on oil prices, the first trader said by telephone.

“The local currency continued to weaken after Iran denied reports of a negotiation with its US counterparts to end their ongoing conflict,” the second trader said in an e-mail.

For Friday, the second trader said the peso could recover ahead of potentially softer US labor data. The first trader sees the peso moving between PHP 58.30 and PHP 58.70 per dollar, while the second trader expects it to range from PHP 58.50 to PHP 58.75.

The dollar strengthened on Thursday after briefly retreating from three-month highs, as the fallout from war in the Middle East roiled global markets and kept sentiment fragile, bolstering demand for the safe-haven currency, Reuters reported.

Earlier in the session, a towering rally in the dollar was halted as investors clung on to tenuous assumptions that the conflict might not last as long as initially expected and for a resumption of oil shipments through the Strait of Hormuz.

But markets remained at the mercy of the US-Israel war with Iran, now in its sixth day, after Iran launched a wave of missiles at Israel, sending millions of residents into bomb shelters.

That kept the greenback in favor as it quickly reversed early losses to trade higher, leaving the euro down 0.2% at $1.1608 and sterling falling 0.27% to $1.3335.

Against a basket of currencies, the dollar was up 0.2% at 99.00, resuming its climb toward an over three-month high hit earlier this week.

The dollar has risen nearly 1.4% for the week thus far, emerging as one of a handful of winners in a volatile few sessions that have dragged stocks, bonds and, at times, even safe-haven precious metals lower.

The spike in energy prices from the Middle East war has stoked fears of a resurgence in inflation that could derail the rate outlooks for major central banks.

Traders are now pricing in just a 34% chance of a Federal Reserve rate cut in June, as compared with a near 46% chance a week ago, according to the CME FedWatch tool, though that has in part been driven by upbeat US economic data on Wednesday.

The yen similarly reversed early gains and was last little changed at 157.08 per dollar. — A.M.C. Sy with Reuters