Peso slips as markets weigh Iran sanctions

The peso edged down against the dollar on Tuesday after the United States announced economic sanctions against countries trading with Iran.

The currency slipped by 0.8 centavo to close at PHP 61.738 versus the greenback from its PHP 61.73 finish on Monday, data from the Bankers Association of the Philippines’ website showed.

The local unit opened Tuesday’s session slightly weaker at PHP 61.777 per dollar. Its worst showing was PHP 61.79, while its intraday high was at PHP 61.65 against the greenback.

Dollars exchanged rose to USD 1.57 billion from USD 970.2 million previously.

The dollar was mostly stronger on Tuesday after the US threatened to cut off countries dealing with Iran, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The US dollar regained some strength on Tuesday as investors parsed Washington’s expanded sanctions against Iran, Reuters reported.

The dollar index, which measures the US currency against six major peers, gained 0.1% to stand at 99.07. That extended a gain of 0.16% overnight, further lifting it from three-month lows amid a revived debasement trade.

Iran promised to retaliate against expanded US sanctions that the Americans said would cut Iran’s economic lifeline, with Tehran expressing confidence that major trading partners would resist Washington’s pressure campaign.

US Treasury Secretary Scott Bessent unveiled the measures on Monday but stopped short of the most punishing sanctions, saying countries that continued trading with Iran risked being forced out of the dollar-based financial system.

Mr. Bessent declined to identify the countries that would be targeted or reveal when the penalties would take effect, saying he would instead give them time to comply with the new directive. The Treasury Department did announce new sanctions on 60 individuals, entities and vessels, but the list did not feature any of the Chinese financial institutions suspected of facilitating Iran’s oil trade.

Iran and the United States signed an interim deal in June aimed at ending the war that began with US and Israeli attacks on Iran, but the Islamabad memorandum, as it is known, quickly faltered.

Despite no major strikes by either side in weeks, the war shows little sign of reaching a diplomatic solution. The United States is seeking new ways to end Iranian attacks on ships in the Gulf and, more recently via its allies, in the Red Sea.

The peso was rangebound as the market moved cautiously ahead of key US data releases and US Federal Reserve Chair Kevin Warsh’s statement at the Jackson Hole Symposium this week, a trader said by phone.

For Wednesday, the trader said markets will remain cautious as they await developments in the Middle East. The trader sees the peso moving between PHP 61.50 and PHP 62 against the dollar, while Mr. Ricafort expects it to range from PHP 61.65 to PHP 61.80. — A.M.C. Sy with Reuters