THE PESO may remain at the P57-a-dollar level this week ahead as the market awaits developments in the conflict in the Middle East.
The local unit closed at P57.65 per dollar on Friday, depreciating by 46 centavos from its P57.19 finish on Thursday, Bankers Association of the Philippines data showed.
This was the peso’s worst finish since its P58.19-per-dollar close on Nov. 10, 2022.
Week on week, the peso likewise slumped by P1.12 from its P56.53 finish on April 12.
The peso continued to depreciate against the dollar on Friday due to safe-haven demand for the dollar amid intensifying tensions between Israel and Iran, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Iran’s foreign minister on Friday said Tehran was investigating an overnight attack on Iran, adding that so far a link to Israel had not been proven as he downplayed the strike, Reuters reported.
Iranian Foreign Minister Hossein Amirabdollahian told NBC News the drones took off from inside Iran and flew for a few hundred meters before being downed.
Iranian media and officials described a small number of explosions, which they said resulted from air defenses hitting three drones over Isfahan in central Iran in the early hours of Friday. They referred to the incident as an attack by “infiltrators,” rather than by Israel, obviating the need for retaliation.
The attack appeared to target an Iranian Air Force base near the city of Isfahan, deep inside the country, but without striking any strategic sites or causing major damage.
Israel has said nothing about the incident. US Secretary of State Antony Blinken said the United States had not been involved in any offensive operations, while the White House said it had no comment.
A Western diplomat, speaking on condition of anonymity, said Israel struck the airbase with missiles fired from outside Iran, and that Iran was downplaying the incident.
Israel had said it would retaliate after a strike on April 13, the first ever direct attack on Israel by Iran, which caused no deaths after Israel and its allies shot down hundreds of missiles and drones.
Tehran launched those attacks in response to a presumed Israeli airstrike on April 1 that destroyed a building in Iran’s embassy compound in Damascus and killed several Iranian officers including a top general.
The local unit was also dragged down by hawkish signals from US Federal Reserve officials, Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.
For this week, Mr. Roces said the peso could remain at the P57-per-dollar level amid market jitters about the conflict in the Middle East.
“Overall, with the current backdrop of heightened inflation and geopolitical tensions, the dollar is expected to continue to rally,” he added.
Meanwhile, Mr. Ricafort said the peso’s movements will depend on the US gross domestic product growth report for the first quarter and the personal consumption expenditures price index data for March to be released this week.
Mr. Ricafort expects the peso to range from P57.30 to P57.80 per dollar this week, while Mr. Roces sees it moving between P57.10 and P57.50. — A.M.C. Sy with Reuters
