Peso rises on ceasefire optimism

THE PESO climbed to a near two-week high against the dollar on Monday following a two-day trading break as players remain hopeful of a ceasefire between the United States and Iran.

The local unit rose by 11 centavos to end at P60.05 against the greenback from its P60.16 finish on Wednesday, data from the Bankers Association of the Philippines showed. The market was closed on April 2 and 3 in observance of Holy Week.

This was the peso’s best finish in nearly two weeks or since it closed at P59.95 on March 24.

The currency opened Monday’s trading session sharply weaker at P60.55 per dollar. It dropped to as low as P60.595, while its intraday best was at P60 against the greenback.

Dollars traded fell to $1.867 billion from $2.732 billion on Wednesday.

The dollar-peso traded weaker earlier in the session due to threats from US President Donald J. Trump of an escalation in their attacks against Iran if ceasefire talks do not push through, which fueled safe-haven demand for the greenback, a trader said by phone.

“The dollar-peso closed lower amid ceasefire hopes. It traded higher this morning but erased earlier gains.”

The peso was also supported by inflows following the long holiday break, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For Tuesday, the trader said the peso could move between P59.80 and P60.50 per dollar as players watch developments in the Middle East war ahead of Mr. Trump’s 48-hour deadline.

Meanwhile, Mr. Ricafort sees the currency moving from P59.95 to P60.20.

The dollar was steady on Monday, while the yen flirted with the crucial ¥160 per dollar level, as nervous investors took stock of the escalating Iran war, with all eyes on the latest deadline from Mr. Trump to reopen the Strait of Hormuz, Reuters reported.

In an expletive-laden Easter Sunday social media post, Mr. Trump threatened to target Iran’s power plants and bridges on Tuesday if the strategic waterway is not reopened, setting a precise deadline of 8 p.m. Tuesday Eastern Time (0000 GMT).

The euro was at $1.1523, while sterling last fetched $1.3211. The dollar index, which measures the US currency against six rivals, was slightly lower at 100.12.

In the kind of mixed messaging that has baffled supporters, foes and financial markets alike, Mr. Trump told Fox News on Sunday that Iran was negotiating, with a deal possible by Monday.

Axios reported the US, Iran and regional mediators are discussing terms of a potential 45-day ceasefire that could lead to a permanent end to the war.

Global markets have been rattled since the US-Israel war on Iran broke out at the end of February, with Tehran effectively closing the Strait of Hormuz, a key waterway that is a thoroughfare through which about a fifth of the world’s total oil and liquefied natural gas passes.

The closure has caused oil prices to surge well above $100 per barrel, stoking fears of high inflation and upending rates outlooks across the world. Worries about the hit to economic growth have also weighed as stagflation risks swirl. — A.M.C. Sy with Reuters