The peso strengthened against the dollar on Monday following the United States and Iran's agreement to stop their latest exchange of attacks and restart peace talks. The currency appreciated by 12 centavos to close at P61.17 versus the greenback, based on data from the Bankers Association of the Philippines. This increase marks a notable shift in the currency's value. The local unit opened Monday's session at P61.30 per dollar and fluctuated throughout the day, dropping to a low of P61.32 and reaching a high of P61.125 against the greenback.
The volume of dollars traded decreased to $1.427 billion on Monday, down from $2.05 billion on Friday. According to a trader, the dollar-peso closed lower due to improving risk sentiment following the stalled US-Iran attacks ahead of peace talks. This development has contributed to a sense of cautious optimism in the market. The trader attributed the peso's performance to the easing of tensions between the US and Iran, which has positively impacted the currency's value.
Global crude oil prices have mostly corrected slightly higher but have erased almost all of their increase since the war started more than four months ago. As a result, the worst in global crude oil prices and resulting inflationary pressures could have been seen already, which could help reduce the country's import bill, narrow the trade deficit, and ease inflationary pressures. This assessment suggests that the current situation may lead to a more stable economic environment. The expected range for the peso on Tuesday is between P61 to P61.40 against the dollar, according to the trader.
The dollar is headed for its biggest monthly gain in nearly a year, supported by growing chances of rate rises and optimism about the US economy. Investors are watching developments in the Gulf ahead of a key jobs report later this week. The US and Iran traded fresh attacks over the weekend before agreeing to stop and meet, leaving investors nervous about the declared ceasefire and nudging oil prices higher. The euro edged up 0.2% to $1.1399, while the dollar index was steady at 101.34, near last week's 13-month high.
Rising inflationary pressures and a surprisingly hawkish debut from the Federal Reserve Chair have upended market expectations for rate cuts this year. The artificial intelligence-driven boom in US equity markets has been attracting capital, contributing to the dollar's strong performance. As a result, the dollar is heading for a 2.5% gain for June, its biggest monthly rise since July 2025. Weekly data showed investors held their largest bullish position in the dollar relative to other major currencies since 2019, worth some $36.4 billion.
Late this week, the monthly US employment report could give investors a greater sense of how accurately markets are pricing the chances of Fed rate hikes this year. Money markets currently show traders fully expect one rate hike this year, with a roughly 50% chance of a second. The Japanese yen was unchanged on the day, around its lowest point in 40 years, while the Swiss franc strengthened modestly for a third day. These developments will be closely watched by investors and economists alike, as they seek to understand the implications of the current economic trends.
