THE PESO may continue to weaken versus the greenback this week amid expectations of faster inflation in February.
The local unit finished trading at P51.34 per dollar on Thursday, shedding 24 centavos from its P51.10 close on Wednesday, Bankers Association of the Philippines data showed.
It moved sideways from its P51.35 finish on Feb. 18.
Philippine financial markets were closed on Friday, Feb. 25 for a special non-working day in commemoration of the People Power Revolution anniversary.
Geopolitical tensions, which eventually led to a Russian invasion in Ukraine, were the major cause of uncertainty for global markets last week, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message.
Russian forces invaded in Ukraine on Thursday following an announcement by President Vladimir Putin. Western powers, including the US, European Union and the UK, immediately imposed economic sanctions on Russia in light of their actions, Reuters reported.
The unfolding events in Eastern Europe and their impact on oil prices also affected the peso, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Global crude prices surged on Thursday, with Brent surpassing $100 a barrel for the first time since 2014. This was following Russia’s invasion of Ukraine, which caused worries about supply disruptions.
For this week, Mr. Asuncion said the market will be looking out for the February inflation outturn.
A BusinessWorld poll of 15 analysts yielded a median estimate of 3.3% for the February inflation as they cited the impact of higher global oil prices to domestic inflation. If realized, inflation will still be within the 2-4% target range by the central bank but faster than the 3% in January.
The Philippine Statistics Authority will release the February consumer price index report on Friday, March 4.
Oil price movements will also be factored in by market participants in this week’s trading, Mr. Ricafort said.
“It is interesting to note that global oil prices already eased back to $90 levels, which are right before the Russia attacks/invasion of Ukraine,” he said.
Oil prices declined on Friday with April Brent crude futures down by 1.2% to $97.93 per barrel after reaching a high of $101.99, while the US West Texas Intermediate crude dropped $1.22 or 1.3% to $91.59 per barrel following a high of $95.64.
For this week, Mr. Ricafort gave a forecast range of P51.15 to P51.50, while Mr. Asuncion expects the local unit to move within P51.20 to P51.50 a dollar. — Luz Wendy T. Noble with Reuters