Peso nears record low as markets eye Iran deal

The peso sank on Monday, closing just a tad better than its record low, as markets sought the safety of the dollar while awaiting news on the peace talks between the United States and Iran.

The currency fell by 15.6 centavos to close at PHP 61.746 versus the greenback from PHP 61.59 on Friday, according to Bankers Association of the Philippines data posted on its website.

The local unit opened Monday’s session weaker at PHP 61.65 per dollar, which was already its intraday best.

Meanwhile, it reached a low of PHP 61.75 or its all-time-low close recorded on May 18 and 19. The peso last touched this level during the May 20 trading session.

Dollars traded dropped to USD 998.92 million on Monday from USD 1.71 billion on Friday.

“The dollar-peso closed higher on renewed demand for the safe-haven dollar amid stalled US-Iran negotiations and reports of attacks,” a trader said by phone. “There are no clear updates as to what happened to the negotiations.”

For Tuesday, the trader sees the peso ranging from PHP 61.45 to PHP 61.75 against the dollar as the market awaits key data releases this week.

The US dollar was steady on Monday after a small weekly loss as investors awaited developments in Middle East peace talks and US jobs data later this week that could shape the Federal Reserve’s monetary policy path, Reuters reported.

The dollar index, which measures the currency against six peers, edged lower last week on expectations that a deal between the United States and Iran to reopen the Strait of Hormuz was close.

But with little fresh insight into the progress of peace talks and a flareup of hostilities between the US and Iran over the weekend, currency markets are in wait-and-see mode.

The dollar index was little changed on the day at 99.02 after last week’s drop of 0.4%. — Aaron Michael C. Sy with Reuters