THE PESO may strengthen this week on expectations that the central bank will keep benchmark rates low at its meeting this week and of a decline in global oil prices.

The local unit ended at P52.335 per dollar on Friday, weaker by 19.5 centavos from its P52.14 close on Thursday, based on Bankers Association of the Philippines data.

It also depreciated by 4.5 centavos from its P52.29-a-dollar finish a week earlier.

The peso opened Friday’s session at P52.20 versus the dollar. Its weakest showing was at P52.43, while its intraday best was at P52.20 against the greenback.

Dollars exchanged increased to $1.445 billion on Friday from $998.2 million on Thursday.

The peso depreciated as the country posted a wider balance of payments (BoP) deficit last month, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The country’s BoP position stood at a $157-million deficit in February, the Bangko Sentral ng Pilipinas (BSP) reported on Friday. This was attributed to foreign currency withdrawals from the National Government meant to settle its external debt.

The February BoP deficit was slimmer than the $2.01-billion shortfall seen a year earlier, but bigger than the $102-million gap in January. It was also the widest deficit since the $412-million gap in September 2021.

There was also risk-off sentiment in the market as oil prices increased after several days of decline, Mr. Ricafort added.

The benchmark Brent crude futures rose by $8.62 or 8.79% to close at $106.64 a barrel on Thursday, while the US West Texas Intermediate (WTI) crude increased by $7.94 or 8.35% to $102.98 per barrel. 

Market participants are still concerned on possible supply shortages which may result due to sanctions imposed against Russia, Reuters reported.

Mr. Ricafort said the peso may strengthen this week as oil prices are expected to decline.

On Friday, both the Brent and WTI contracts were down by around 4% from a week earlier.

Meanwhile, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said a widely expected accommodative stance from the BSP will be factored in by the market.

A BusinessWorld poll last week showed 16 out of 18 analysts expect the Monetary Board to keep rates at record lows at their policy review on Thursday.

Analysts said the BSP is likely to focus on supporting economic recovery, as some cited how the impact of the Ukraine-Russia conflict to commodity prices is better addressed by fiscal policy at this point.

For this week, Mr. Ricafort gave a forecast range of P52.10 to P52.45 per dollar, while Mr. Asuncion expects a wider P51.85 to P52.35 band. — Luz Wendy T. Noble with Reuters