THE PESO could depreciate this week amid the ongoing war between Russia and Ukraine and with the market expecting more hawkish signals from the US Federal Reserve.

The local unit closed at P51.74 per dollar on Friday, weaker by 24 centavos from its P51.50 finish on Thursday, based on data from the Bankers Association of the Philippines.

The peso also retreated by 40 centavos from its P51.34 close on Feb. 24.

The local unit depreciated versus the greenback due to market concerns on oil supply amid Russia’s invasion of Ukraine, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail.

Reuters reported that fuel prices recorded their biggest weekly gains since 2020 amid market fears on the impact of sanctions against Russia, which is the world’s second-largest exporter of crude.

Brent futures on Friday increased $7.65 or 6.9% to close at $118.11, the highest since February 2013. Meanwhile, the US West Texas Intermediate rose by $8.01 or 7.4% to $115.68 a barrel, the highest since September 2008.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said market sentiment also tracked the country’s record outstanding debt as of January.

Preliminary data released by the Bureau of the Treasury showed outstanding debt hit P12.03 trillion, up by 16.5% from a year earlier and up by 2.6% month on month.

The Treasury said the debt stock rose after another zero-interest loan from the central bank and an increase in borrowing from domestic creditors.

For this week, Mr. Asuncion said the market will continue to track policy signals from the US Federal Reserve ahead of their rate decision this month.

Fed Chairman Jerome H. Powell on Wednesday said he will back a quarter percentage point interest rate increase on the upcoming policy review of the Federal Open Market Committee on March 15 to 16. He also said they will be ready for more aggressive action in case inflation does not cool as quickly as expected.

The market will also continue to monitor the war between Russia and Ukraine, Mr. Ricafort said.

The two parties are expected to have their third round of talks on Monday. The sides on Thursday agreed to launch humanitarian corridors to allow civilians out of combat zones, although some delays were seen on its implementation.

For this week, Mr. Asuncion gave a forecast range of P51.20 to P51.80 per dollar, while Mr. Ricafort expects the local unit to move within P51.40 to P51.90. — Luz Wendy T. Noble with Reuters