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Peso rises more against dollar as US imposes new sanctions on Iran

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The WEO rose again to hit a new one-year high on Tuesday as the dollar remained weak because of tensions between the United States and Iran.

The local unit closed at P51,365 against the dollar yesterday, 2.5 cents stronger than the P51.39 per dollar last Monday.

This was the best showing of the peso in more than a year or since it closed at P51.31 against the dollar on February 8, 2018.

The peso opened the session at P51.33 per dollar. Its intraday high stood at P51.29 against the dollar, while its worst showing was at P51.42 against the US currency.

The dollars traded rose to $ 771.92 million from the $ 732 million that traded hands in the previous session.

"The peso-dollar was traded sideways. We still saw a weak dollar given the tensions between the US and Iran, "a trader said in a telephone interview.

US President Donald Trump has pointed to Iranian supreme leader Ayatollah Ali Khamenei and other Iranian authorities with sanctions on Monday, taking a dramatic and unprecedented step to increase pressure on Iran after the shooting down of an airplane unmanned North American aircraft by Tehran.

With tensions between the two countries, Trump signed an executive order imposing sanctions, which US Treasury Secretary Steven Mnuchin said would bring billions of dollars more in Iranian assets.

Iran will not accept talks with the United States while under threat of sanctions, Iranian ambassador to the United Nations Majid Takht Ravanchi told reporters at the United Nations.

The trader added that the peso strengthened in the morning session with rising risk appetite among investors amid optimistic trade talks between Trump and Chinese President Xi Jinping on the sidelines of the G20 summit in Osaka, Japan , at the end of this week.

"In the afternoon session we saw the purchase of the dollar after the heavy sale in the morning. I think this was a position hedge given that (US Federal Reserve Chairman) (Powell) Powell will speak tonight to discuss views on his monetary policy and economic outlook for the US, "the trader added.

At its June 18-19 meeting, the Fed's Federal Open Market Committee kept interest rates unchanged, but suggested possible rate cuts before the end of the year. The Fed said it would continue to "act as appropriate" amid market uncertainties.

For today, the trader expects the peso to be traded between P51.20 and P51.50, while another trader gave a range of P51.20-P51.40.

"The peso may remain strong amid optimism ahead of the G20 summit this week and the country's persistent expectations for US monetary policy in the coming months," the second trader said in an e-mail. – Karl Angelo N. Vidal with Reuters

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