Peso sinks back to PHP 61 range on US-Iran impasse

The peso slid back to the PHP 61-per-dollar level on Tuesday as hopes for a peace deal between the United States and Iran faded due to new demands from both parties.

The currency fell by 55.5 centavos to close at PHP 61.26 versus the greenback from PHP 60.705 on Monday, based on data from the Bankers Association of the Philippines’ website.

This was its worst single-day performance since late April and was its weakest close in nearly two weeks.

The local unit opened Tuesday’s session weaker at PHP 60.90 per dollar, which was already its intraday best. Its worst showing was at PHP 61.275 versus the greenback.

Dollars exchanged went up to USD 1.599 billion from USD 1.47 billion.

“The dollar-peso closed higher, mostly on dimming hopes for a deal with Iran on reopening the Strait of Hormuz following new demands from Trump,” a trader said by phone.

The peso was also dragged by the resulting increase in global crude oil prices following the latest breakdown in the US-Iran negotiations, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort likewise said in a Viber message.

The local unit also tracked the Japanese yen’s decline, he added.

Oil prices rose on Tuesday as negotiations between the United States and Iran over a peace deal and the reopening of the Strait of Hormuz hit an impasse, Reuters reported.

US President Donald J. Trump responded with his own demands on Monday to Tehran’s conditions for a peace deal, calling for Iran to pay compensation for those killed in wars, attacks and protests, potentially complicating efforts to reopen the crucial waterway.

Brent crude futures have risen 5% in the last two days alone and were last around USD 88 a barrel, their highest since July 31 and nearly 25% above early July’s near-four-month lows.

Among currencies, the yen was back in the spotlight, as it weakened beyond 159 again and was off last week’s high of 155.20 after several suspected rounds of intervention, including a joint move by Japan and the United States.

For Wednesday, the trader sees the peso moving between PHP 61 and PHP 61.50 against the dollar, while Mr. Ricafort expects it to range from PHP 61.10 to PHP 61.30. — A.M.C. Sy with Reuters