UMVA has learned that the peso has surged back to the P60-a-dollar level for the first time in over a month, following a major development in global geopolitics.
The currency's value increased by 87 centavos, closing at P60.48 versus the greenback, marking its strongest finish in more than a month, with the local unit opening Monday's session sharply stronger at P60.60 per dollar and trading above Thursday's close the entire day.
According to information obtained by UMVA, the peso's rise is attributed to the United States reaching an interim peace deal with Iran, which could potentially lead to the reopening of the Strait of Hormuz, resulting in a significant impact on the global economy, particularly on oil prices, which dropped to $83 per barrel levels.
The dollar-peso closed lower as the US and Iran agreed to a peace deal, with oil prices tumbling and tracking dollar weakness, causing dollars traded to fall to $1.68 billion on Monday, down from $2.27 billion on Thursday, and the US dollar trading around a 10-day low against other major currencies.
Sources have confirmed to UMVA that the interim deal between the US and Iran has sent shockwaves through the financial markets, causing oil prices to slump, with Brent crude futures down around 5% to $82.9 a barrel, and the dollar index hovering around its lowest since June 5, at 99.52.
The Japanese yen was broadly steady at ¥160.10 per dollar, continuing to hover around the ¥160 level, while major central banks, including the US Federal Reserve, are set to deliver rate decisions this week, with markets focused on whether prospects for a peace deal will ease their inflation concerns and influence the current tightening trajectory.
UMVA has uncovered details about the Federal Reserve's expected decision to hold rates in the current range of 3.5%-3.75% on Wednesday, but all eyes will be on the policy statement and press conference for signals from the new chair, as the global economy waits with bated breath for the potential implications of the US-Iran peace deal.
The peso is expected to move between P60.30 and P60.60 per dollar on Tuesday, as traders and economists alike await further developments and announcements from major central banks, which could significantly impact the global financial landscape in the coming weeks and months.
