The Philippine peso surged back below the P61-per-dollar threshold on Monday, propelled by a recovery in the Japanese yen following coordinated intervention by Japanese and US authorities and by growing optimism surrounding a potential Middle East peace agreement.

The local currency gained 31 centavos to close at P60.93 against the dollar, up from Friday's finish of P61.24, according to data from the Bankers Association of the Philippines' website. The close marked the peso's strongest level in more than six weeks, dating back to June 19, when it ended at P60.775 per dollar.

The peso opened the session sharply firmer at P61 and maintained upward momentum throughout the trading day. Its intraday worst was P61.08, still stronger than the previous session's close, while its intraday peak reached P60.87 against the greenback. Total dollar volume declined to $1.448 billion from $1.555 billion in the prior session.

"The peso closed [stronger], breaking the P61-per-dollar figure, tracking regional currencies led by the Japanese yen following joint intervention by the BoJ (Bank of Japan) and the US," a trader said in a phone interview. The trader added that news of the resumption of peace talks between the US and Iran also contributed to broad dollar weakness.

The yen's rally rippled across Asian foreign exchange markets, where the Japanese currency often serves as a bellwether for regional sentiment. A firmer yen typically eases pressure on other Asian currencies by damping broad dollar strength.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the peso drew additional support from easing inflationary pressures tied to a decline in global crude oil prices, which fell amid hopes for a Middle East peace deal. The Philippines, as a net oil importer, is particularly sensitive to swings in energy costs, which feed through to consumer prices and the country's trade balance.

Looking ahead to Tuesday's session, the trader projected the peso to trade in a range of P60.70 to P61.10, while Mr. Ricafort forecast a tighter band of P60.80 to P61.05.

Oil prices fell sharply on Monday as expectations of a breakthrough in the Middle East intensified. Brent crude futures dropped $4.50, or more than 5%, to $83.40 a barrel, after US President Donald J. Trump announced that talks with Iran would take place on Monday. He had previously called off a planned military strike on Iran in order to pursue a diplomatic agreement to reopen the Strait of Hormuz, a narrow channel through which roughly a fifth of global oil consumption transits daily.

Meanwhile, the yen firmed to a three-month high after the US and Japan confirmed joint intervention to support the embattled currency, Reuters reported. The Japanese currency strengthened more than 0.5% to ¥156.70 per US dollar, having earlier touched ¥155.2 — its strongest level since early May — a move that put traders on alert for possible further action.

Japan's finance ministry confirmed the coordinated yen-buying intervention on Monday, calling it a rare bilateral action aimed at halting the yen's slide toward 40-year lows and stating that authorities would not hesitate to take additional measures if needed.

US Treasury Secretary Scott Bessent said the United States would consider expanding the size of the Federal Reserve's repurchase facility — which provides temporary dollar liquidity — in the coming months, describing the mechanism as an "important backstop."

Speaking on Sunday, Mr. Trump said the United States was assisting Japan in supporting the yen as both a gesture of friendship and an effort to bolster the global economy.

Before the latest round of interventions, the yen had languished near 40-year lows of ¥163.99 per US dollar in recent weeks. Data from a US regulator showed net short positions on the yen stood at approximately $12.5 billion, the highest level in two years.

— Aaron Michael C. Sy with Reuters