Peso weakens on hawkish Fed remarks, rise in oil prices
THE PESO retreated versus the greenback on Wednesday as oil prices inched higher and following hawkish statements from the US Federal Reserve’s chief.
The local unit closed at P51.19 per dollar on Wednesday, shedding five centavos from its P51.14 finish on Tuesday, based on data from the Bankers Association of the Philippines (BAP).
The peso opened the session stronger at P51 per dollar. Its weakest showing was at P51.26, while its intraday best was at P50.94 against the greenback.
Dollars traded declined to $1.114 billion on Wednesday from $1.221 billion on Tuesday.
The peso finished weaker after hawkish statements from Fed Chair Jerome H. Powell, a trader said in an e-mail.
Mr. Powell, in his statement at a congressional hearing on Tuesday, said the economy should be able to weather the impact of the current surge and is ready to face tighter monetary policy, Reuters reported.
“Inflation is running very far above target. The economy no longer needs or wants the very accommodative policies we have had in place,” Mr. Powell said.
Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort in a Viber message said higher oil prices caused the peso to depreciate.
US West Texas Intermediate crude futures increased by 0.2% to $81.38 per barrel at 0731 GMT, following its 3.8% rise in the previous session. The Brent crude futures also inched up by 2 cents to $83.74 a barrel after its price increased by 3.5% in the prior session.
For Thursday, Mr. Ricafort gave a forecast range of P51.10 to P51.30, while the trader expects the local unit to move within P50.10 to P50.35 per dollar.
Meanwhile, amid the continued rise in virus infections, the BAP said peso-dollar spot trading and swap trading hours will remain at 9 a.m. to 4 p.m. from Monday to Friday.
“This step shall guarantee the continued operation of financial markets, therefore enabling market participants to continue meeting their liquidity needs as well as making appropriate hedges in their portfolios and balance sheets for risk management purposes,” the BAP said in a statement.
The group urged clients to check their respective banks regarding changes and availability of retail services such as foreign exchange. — L.W.T. Noble with Reuters
