Home Banking & Finance Peso retreats on higher oil prices

Peso retreats on higher oil prices

THE PESO dropped versus the dollar due to higher oil prices. — BW FILE PHOTO

THE PESO weakened versus the greenback on Monday due to cautious sentiment amid higher oil prices and faster US producer inflation.

The local closed at P49.975 per dollar on Monday, shedding 11 centavos from its P49.865 finish on Friday, based on data from the Bankers Association of the Philippines.

The peso opened Monday’s session at P49.97 per dollar. Its weakest showing was at P50.07, while its intraday best was at P49.95 against the greenback.

Dollars traded increased to $843.45 million on Monday from $774.19 million on Friday.

The peso weakened due to safe-haven demand for the dollar as oil prices rose, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Reuters reported that oil prices increased for a second session on Monday due to market concerns on reduced output amid the impact of Hurricane Ida in the US. Both the Brent crude and the US West Texas Intermediate (WTI) markets were at their highest since Sept. 3 earlier in the session.

Brent crude rose 67 cents or 0.9% to $73.59 a barrel, the US WTI crude increased 66 cents or 1% to $70.38 per barrel at 0633 GMT.

Meanwhile, a trader said faster-than-expected US producer inflation also caused risk-off sentiment and affected peso-dollar trading.

The producer price index (PPI) for final demand increased 0.7% in August after two straight monthly increases of 1%, the US Labor department said. In the 12 months through August, the index rose 8.3%, which is its fastest year-on-year rise since November 2010 when the series was revamped.

Both the monthly and year-on-year increase in the PPI are faster than estimates of economists in a Reuters poll at 0.6% and 8.2%, respectively.

For Tuesday, Mr. Ricafort gave a forecast range of P49.90 to P50.10 per dollar, while the trader expects the local unit to move within P49.85 to P50.10. — L.W.T. Noble with Reuters