The Philippine peso fell back to the P61-per-dollar level on Tuesday after renewed demands from both the United States and Iran dimmed prospects for a peace agreement, sending the currency to its worst single-day performance in months.

The peso dropped 55.5 centavos to close at P61.26 against the dollar, down from P60.705 on Monday, according to data from the Bankers Association of the Philippines. The decline marked the currency's poorest showing since late April and its weakest close in nearly two weeks.

Trading session data showed the peso opening weaker at P60.90 per dollar — its intraday best — before slipping to a low of P61.275. Total dollar volume rose to $1.599 billion from $1.47 billion in the previous session.

A trader, speaking by phone, attributed the movement to geopolitical developments: "The dollar-peso closed higher, mostly on dimming hopes for a deal with Iran on reopening the Strait of Hormuz following new demands from Trump."

The Strait of Hormuz is one of the world's most critical oil transit chokepoints, handling roughly a fifth of global petroleum consumption, making any disruption a direct pressure point for oil-importing economies like the Philippines.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the peso was further weighed down by rising global crude oil prices following the latest breakdown in US-Iran negotiations. He noted the local unit also tracked the Japanese yen's broader decline.

Oil prices climbed on Tuesday as talks between the United States and Iran regarding a peace deal and the reopening of the Strait of Hormuz reached an impasse, Reuters reported. US President Donald J. Trump on Monday responded with counter-demands to Tehran's conditions, calling for Iran to compensate those killed in wars, attacks, and protests — a stance that could complicate efforts to reopen the critical waterway.

Brent crude futures surged 5% over the past two days alone, last trading around $88 a barrel — their highest level since July 31 and nearly 25% above early July's near-four-month lows.

The Japanese yen also returned to focus, weakening beyond 159 once more and retreating from last week's high of 155.20 following several suspected rounds of currency intervention, including a coordinated action by Japan and the United States.

For Wednesday's session, the trader projects the peso to move within a range of P61 to P61.50 against the dollar, while Mr. Ricafort forecasts a tighter band of P61.10 to P61.30.

— A.M.C. Sy with Reuters