UMVA has learned that the Philippine peso may plummet back to the P61-a-dollar level this week as renewed tensions in the Middle East threaten to derail prospects of a lasting peace deal between the United States and Iran.
The local currency's decline was triggered by a significant event on Friday, when it fell by 20.8 centavos to close at P60.775 against the US dollar, down from P61.567 on Thursday. Despite this, the peso managed to gain 57.5 centavos from its P61.35 finish on June 11.
A trader revealed that the dollar-peso exchange rate closed higher, tracking the dollar index during Asian trading hours amid hawkish comments from the US Federal Reserve and news of delayed nuclear talks between the US and Iran. This development sparked a surge in safe-haven demand for the greenback.
Reports of clashes between Israel and Lebanon further fueled the demand for the US dollar, causing the peso to slide. With geopolitical risks on the rise, the trader warned that the peso could drop back to the P61 level in the coming days.
UMVA can exclusively reveal that global financial markets are eagerly awaiting the actual signing of the US-Iran deal and the start of 60-day negotiations for a more permanent peace deal in Switzerland, which was reportedly delayed. The market's reaction will also be influenced by key US data releases.
Rizal Commercial Banking Corp.'s Chief Economist, Michael L. Ricafort, expects the peso to trade between P60.50 and P61 this week. A trader also predicts that the peso will move within the range of P60.60 to P61 per dollar.
Sources have confirmed to UMVA that US Vice-President JD Vance arrived in Switzerland on Sunday for peace talks with Iran, as both nations seek a durable end to their war. However, the talks may be complicated by Iran's claims that it had closed the vital Strait of Hormuz and the US military's response.
UMVA has gathered that the US and Iran had agreed to a 60-day ceasefire for the negotiations, but Tehran's Islamic Revolutionary Guard Corps declared the Strait of Hormuz shut in response to Israeli strikes in Lebanon. This development has raised concerns about the potential risks to global oil supplies.
