Philippine peso gains as Middle East peace hopes, lower U.S. yields support trade

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Philippine peso gains on positive trade

Highlights

The peso closes at P63.47 per dollar on Tuesday, up 27 centavos from Friday and marking its strongest finish since Oct. 21.
Easing Middle East tensions and lower U.S. Treasury yields support the peso, while dollar volume declines to $1.04 billion from $1.28 billion.
Remittance flows after the long weekend and focus on upcoming U.S. jobs data drive expectations for the peso to trade between P63.30 and P63.70.

Peso rally reflects shifting global risk sentiment

As reported by BusinessWorld Online, the peso closes at P63.47 per dollar on Tuesday, stronger by 27 centavos from its P63.74 finish on Friday, based on data from the Bankers Association of the Philippines. That marks the local currency's best close since Oct. 21, when it finished at P63.361.

The peso opens the session at P63.50 and trades stronger than Friday's close throughout the day. It reaches an intraday high of P63.445, while its weakest level is P63.55. Dollar volume falls to $1.04 billion from $1.28 billion.

A trader says the dollar-peso pair resumes its climb amid signs of easing tensions in the Middle East, which help trigger a pullback in oil prices. Oil markets remain volatile this week as conflicting signals emerge from the U.S. and Iran over efforts to end the war in the region.

Reuters reports that the U.S. carries out strikes on Iran's Qeshm Island in the Strait of Hormuz, citing a U.S. official and confirming an earlier Wall Street Journal report. Hours earlier, U.S. President Donald J. Trump says a deal to end the war could happen, while Qatari mediators travel to Tehran for talks with Iranian Foreign Minister Abbas Araqchi on a potential U.S.-Iran agreement.

Lower yields and remittances add support

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort says in a Viber message that lower U.S. Treasury yields also support the peso. He adds that the local unit strengthens after the long weekend, which leads to an increase in remittance flows.

For Wednesday, the trader expects the peso to move within a P63.30 to P63.70 range against the dollar ahead of the release of U.S. jobs data. Ricafort sees the currency trading between P63.40 and P63.60, suggesting markets remain focused on both external risk sentiment and incoming U.S. economic indicators.

Our earlier report on Philippine stocks and the peso highlighted how the PSEi rebounded on bargain hunting even as the peso slid to a new record low near the P63-per-dollar level. We also noted that investor sentiment stayed cautious amid currency pressure, with easing U.S. Treasury yields and a return of net foreign buying providing partial support.

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