THE PESO sank to an over one-month low against the dollar on Tuesday as global crude oil prices spikedamid re-escalating tensions in theMiddle East (ME).
The currency dropped by 11.1 centavos to close at P61.71 versus the greenback from P61.599 on Monday, data published on the Bankers Association of the Philippines’ website showed. This was the peso’s worst finish in more than a month or since it ended at P61.745 on June 3, near its all-time-low close of P61.75 last recorded on May 19.
The local unit opened Tuesday’s session weaker at P61.68 versus the greenback. It traded lower than Monday’s close the entire day, reaching a high of just P61.66 while its intraday low was at P61.73 per dollar.
Dollars exchanged went up to $995.28 million from $957.5 million previously.
The peso was dragged by higher global crude oil prices following the latest round of clashes between the US and Iran, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The peso weakened anew ahead of a likely strong US core inflation report overnight,” a trader said in an e-mail.
For Wednesday, the trader said the peso could depreciate further before the release of US producer inflation data, which they expect to be “robust.”
The trader sees the peso moving between P61.55 and P61.80 against the dollar, while Mr. Ricafort expects it to range from P61.55 to P61.75.
The dollar steadied on Tuesday ahead of US inflation data, with Middle East tensions lifting oil prices, Reuters reported.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, eased 0.09% to 101.18.
Inflation risks remain in the spotlight with the release of US June consumer price index data later on Tuesday, June producer price index gauges the following day, and Fed Chair Kevin Warsh’s first semiannual testimony before Congress.
Concerns over escalating tensions between the United States and Iran returned to the fore, with President Donald J. Trump saying on Monday Washington was reinstating a naval blockade on Tehran and would ensure the Strait of Hormuz remained open for a fee following fresh exchanges of missile and drone strikes.
US and Iranian forces exchanged heavy missile and drone assaults at the weekend, with Tehran striking US facilities in states across the Gulf on Sunday and saying it had again closed the vital Strait of Hormuz shipping route.
Oil prices climbed nearly 3% on Tuesday to their highest point in four weeks after the US said it would reimpose a naval blockade, heightening uncertainty about energy flows.
Meanwhile, Fed funds futures are pricing in about 43 basis points of rate hikes by the US central bank this year, according to LSEG data. —A.M.C. SywithReuters
