Peso firms up to 59:$1 as markets cheer temporary Mideast truce
The Philippine peso strengthened to the 59-per-dollar level on Wednesday, posting its largest gain in nearly a month, as markets welcomed a temporary ceasefire between the United States and Iran.
The local currency surged 90 centavos to close at 59.43 against the US dollar, its strongest finish since March 12, when it ended at 59.385. It briefly touched an intraday high of 59.291 before trimming some gains.
Trading was brisk, with $2.5 billion changing hands, up from $1.7 billion in the previous session.
Markets rallied after the US and Iran agreed to a two-week ceasefire that President Donald Trump said hinges on the complete, immediate and safe reopening of the Strait of Hormuz.
The deal paused a devastating clash that had jolted oil prices and rattled the global economy, as Trump backed away from his latest threat against Iran’s “whole civilization.” The development sent crude prices tumbling 20 percent, weakened the US dollar, propped up Asian currencies, lowered US Treasury yields and boosted US equity futures by more than 2 percent.
“The move back to 59 looks technical—profit-taking on dollar longs and a brief easing in sentiment,” a trader said. “It can hold near term, but likely stays range-bound; not yet a sustained turn without a shift in fundamentals.”
Another trader said: “For the rest of the week, the peso might settle and trade sideways within the 59-level as market participants will digest further developments on the Iranian side following the US’ move.”
Despite the boost in risk sentiment, Michael Wan, senior currency analyst at MUFG Global Markets Research, cautioned that certain Asian currencies, including the peso, could still face pressure.
“Even if the Strait of Hormuz were to open today, in practice it will take some time for flows of fuel energy to take place given that there have already been significant shut-ins by many Gulf oil producers,” Wan said.
“As such, we think it would still make sense to stay with our Asia currency preference of the likes of Chinese yuan and Malaysian ringgit and remain cautious on the likes of Indian rupee, Philippine peso and Thai baht notwithstanding how the Iran conflict and negotiations will play out,” he added.
