Peso weakens on geopolitical concerns

The peso weakened against the dollar on Wednesday as heightened geopolitical concerns affected market sentiment.

The local unit closed at PHP 55.66 per dollar, dropping by three centavos from its PHP 55.63 finish on Tuesday, Bankers Association of the Philippines data showed.

The peso opened Wednesday’s session stronger at PHP 55.58 against the dollar. It dropped to as low as PHP 55.70, while its intraday best was at PHP 55.56 versus the greenback.

Dollars exchanged went down to USD 1.51 billion on Wednesday from USD 1.999 billion on Tuesday.

“The dollar-peso initially [rose] to PHP 55.56, still on pressure on the dollar following Moody’s US credit rating downgrade, but risk-off sentiment due to ongoing tension between Israel and Iran lifted the dollar against the peso to PHP 55.70,” a trader said in a phone interview.

The news about Israel’s plan to strike Iran’s nuclear facilities also led to higher global crude oil prices on Wednesday, which dragged the peso further, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For Wednesday, the trader expects the peso to move between PHP 55.50 and PHP 55.80 per dollar on Tuesday, while Mr. Ricafort sees it ranging from PHP 55.55 to PHP 55.75.

New intelligence obtained by the United States suggests that Israel is making preparations to strike Iranian nuclear facilities, CNN reported on Tuesday, citing multiple US officials familiar with the intelligence, Reuters reported.

It was not clear whether Israeli leaders have made a final decision and there was disagreement within the US government about whether the Israelis would ultimately decide to carry out strikes, CNN added, citing the officials.

Reuters could not immediately confirm the report, which contributed to a rise in oil prices by more than 1% on concern such a strike might upset Iranian flows. The National Security Council did not immediately respond to a request for comment.

The Israeli Embassy in Washington, the Israeli Prime Minister’s Office and the Israeli military did not immediately respond to requests for comment.

One source familiar with the intelligence told CNN the likelihood of an Israeli strike on an Iranian nuclear facility “has gone up significantly in recent months.”

The person added that the chance of a strike would be more likely if the US reached a deal with Iran that did not remove all of the country’s uranium, CNN added.

US President Donald J. Trump’s administration has been conducting negotiations with Iran aimed at achieving a diplomatic deal over its nuclear program.

The new intelligence was based on the public and private communications from senior Israeli officials as well as intercepted Israeli communications and observations of Israeli military movements that could suggest an imminent strike, CNN reported.

CNN cited two sources saying that among the military preparations the US had observed were the movement of air munitions and the completion of an air exercise.

Earlier on Tuesday, Iran’s Supreme Leader Ayatollah Ali Khamenei said US demands that Tehran stop enriching uranium are “excessive and outrageous,” state media reported, voicing doubts over whether talks on a new nuclear deal will succeed. — Aaron Michael C. Sy with Reuters