Peso gains as traders await US-Iran talks, BSP policy

The Philippine peso inched up against the dollar on Tuesday as traders stayed on the sidelines ahead of developments in US-Iran negotiations and the Bangko Sentral ng Pilipinas’ (BSP) policy decision this week.

It closed at PHP 59.938 a dollar, 3.2 centavos stronger than Monday’s PHP 59.97 finish, according to Bankers Association of the Philippines data posted on its website.

The peso opened at PHP 59.87 and traded within a range of PHP 59.86 to PHP 60.005. Total dollar volume fell to USD 1.476 billion from USD 1.54 billion in the previous session.

A trader said the market was largely cautious as investors awaited signals from talks between the US and Iran ahead of a looming ceasefire deadline.

Expectations of tighter monetary policy at home also supported the peso. BSP Governor Eli M. Remolona, Jr. earlier said the central bank has room to raise interest rates to address inflation risks linked to the Middle East war.

He warned that second-round effects from higher global oil prices could spill over into domestic food and transport costs.

A BusinessWorld poll showed 11 of 19 analysts expect the Monetary Board to raise the benchmark rate by 25 basis points this week, which would bring it to 4.5% — the first hike since October 2023.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said rate hike expectations helped support the peso’s stability.

For the near term, the trader said the peso could weaken toward P60.20 if US-Iran negotiations fail to produce a breakthrough, while a positive outcome might push it closer to PHP 59.50. Mr. Ricafort expects the peso to trade at PHP 59.80 to PHP 60. — A.M.C. Sy