Peso strengthens to near four-month high as geopolitical concerns ease

The peso appreciated to a near four-month high against the dollar on Monday on improved sentiment amid news of progress in talks between the United States and Iran.

The local unit rose by 13 centavos to close at PHP 58.455 versus the greenback from its PHP 58.585 finish on Friday, data from the Bankers Association of the Philippines showed.

This was the peso’s strongest finish in almost 16 weeks or since it ended at PHP 58.41 on Oct. 22, 2025.

The local currency opened Monday’s trading session stronger at PHP 58.50 against the dollar. Its intraday best was at PHP 58.38, while its worst showing was at PHP 58.55.

Dollars traded dropped to USD 1.08 billion from USD 1.62 billion on Friday.

“The dollar-peso closed lower on improving risk sentiment following some progress on US-Iran talks,” a trader said in a phone interview.

Iran and the US pledged to continue the talks following what both sides described as positive discussions on Friday in Oman, Reuters reported. That eased the concern that a failure to reach a deal might nudge the Middle East closer to war, as the US has positioned more military forces in the area.

The peso was also supported by data showing that the country’s dollar reserves hit a multi-month high in January, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Philippines’ gross international reserves rose by 8.95% to a 16-month high of USD 112.515 billion in January from USD 103.271 billion in the same month a year ago, based on preliminary data from the Bangko Sentral ng Pilipinas. This was the highest level since the USD 112.707 billion recorded at end-September 2024.

Month on month, it went up by 1.52% from USD 110.833 billion in December.

For Tuesday, the trader said the peso could consolidate as markets await the release of the latest US nonfarm payrolls data.

The trader sees the peso moving between PHP 58.30 and PHP 58.60 per dollar, while Mr. Ricafort expects it to range from PHP 58.35 to PHP 58.55.

Meanwhile, the yen strengthened in Asian trading on Monday after Japanese Prime Minister Sanae Takaichi swept to victory in Sunday’s election, abruptly reversing a six-day string of losses as traders bet fiscal stimulus will boost the stock market, Reuters reported.

The yen erased an earlier 0.3% decline, which saw the currency reach its weakest in two weeks, before strengthening 0.4% to 1 JPY 56.52 against the dollar.

The yen also retraced losses against other currencies, which earlier saw it reach its weakest on record against the Swiss franc and trade near the weakest point since the creation of the euro.

The US dollar index was down 0.2% at 97.38 at the start of a week that will see several key data releases out of Washington, including retail sales, inflation and Wednesday’s delayed jobs report.

Traders are considering whether the Federal Reserve will ease policy later this year following signs of stress in the labor market. Fed funds futures are now pricing an implied 17.9% probability of a 25-basis-point cut at the central bank’s next meeting, down from an 18.4% chance on Friday, according to the CME Group’s FedWatch tool. — A.M.C. Sy with Reuters