Home Banking & Finance Peso drops vs dollar as oil prices climb

Peso drops vs dollar as oil prices climb

THE PESO weakened against the dollar on Monday as rising oil prices fueled inflation fears. — BW FILE PHOTO

THE PESO weakened on Monday due to investor preference for the safe-haven dollar on inflation concerns as oil prices climbed further.

The local unit closed at P50.80 per dollar on Monday, depreciating by 22 centavos from its P50.58 finish on Friday, data from the Bankers Association of the Philippines showed.

The peso opened Monday’s session at P50.55 per dollar, which was also its intraday best. Meanwhile, its weakest showing was its closing level of P50.80.

Dollars exchanged dropped to $784.55 million on Monday from $1.159 billion on Friday.

Inflation concerns due to the continued rise in international crude oil prices caused the peso to decline against the dollar, a trader said.

Oil prices climbed further on Monday due to low energy supply amid increasing economic activity, Reuters reported.

Brent crude rose $1.20 or 1.5% to $83.59 a barrel by 0656 GMT, extending last week’s 4% rally. Meanwhile, US oil inched up by $1.46 or 1.8% to $80.81 per barrel, the highest since late 2014.

The peso also weakened due to lower coronavirus disease 2019 (COVID-19) infections in the country the previous days, which fueled hopes of a further reopening of the economy, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Active COVID-19 cases rose by 8,292 on Monday to bring the total to 98,894, based on data from the Department of Health.

Mr. Ricafort expects the peso to move within P50.70 to P50.90 per dollar on Tuesday, while the trader gave a forecast range of P50.70 to P50.95. — LWTN with Reuters