THE PESO retreated versus the greenback on Tuesday on cautious sentiment due to higher US yields and oil prices.

The local unit ended trading at P51.488 per dollar on Tuesday, weakening by 23.3 centavos from its P51.255 close on Monday, based on data from the Bankers Association of the Philippines.

The peso opened Tuesday’s session stronger at P51.20 per dollar, which was also its intraday best. Its weakest showing was its close of P51.488 against the greenback.

Dollars exchanged went up to $841.60 million on Tuesday from $820.90 million on Monday.

The peso was down on cautious sentiment amid higher US Treasury yields, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Reuters reported that US two-year yields, which track short-term rate expectations, crossed 1% for the first time since February 2020.

Meanwhile, a trader attributed the peso’s weakness to “lingering inflationary concerns amid the continued increase in international crude oil prices.”

Oil prices increased by more than $1 to more than seven-year high on Tuesday amid concerns about probably supply disruptions after an attack by Yemen’s Houthi group to the United Arab Emirates.

Brent crude futures inched up by $1.37 or 1.6% to $87.85 a barrel by 0738 GMT, while US West Texas Intermediate crude futures climbed by $1.71 or 2% from Friday’s settlement to $85.53 a barrel. 

Both benchmarks surged to their highest since October 2014.

For Wednesday, Mr. Ricafort gave a forecast range of P51.30 to P51.50 per dollar, while the trader expects the local unit to move within P51.35 to P51.60. — L.W.T. Noble with Reuters