Peso down on oil prices, hawkish Fed
THE PESO weakened versus the greenback on Monday after an increase in global oil prices and hawkish signals from a US Federal Reserve official.
The local unit closed at P52.27 per dollar on Monday, down by four centavos from its P52.23 finish on Friday, Bankers Association of the Philippines data showed.
The peso opened Monday’s session at P52.22 against the dollar. Its weakest showing was at P52.37, while its intraday best was at P52.15 versus the greenback.
Dollars exchanged decreased to $1.19 billion on Monday from $1.29 billion on Friday.
The peso weakened as global oil prices continued to rise, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Oil prices gained on Monday with a high fuel demand and tight supply amid US peak driving season traditionally beginning at the end of May and ends in September, Reuters reported.
Brent crude futures rose 97 cents to $113.52 a barrel at 0651 GMT, while US West Texas Intermediate (WTI) crude futures climbed 80 cents or 0.73% to $111.08 a barrel, adding to last week’s small gains for both contracts.
Mr. Ricafort said hawkish statements from Federal Reserve Bank of St. Louis President James Bullard also supported the dollar, causing the peso to depreciate.
Mr. Bullard last week said the US central bank should front-load rate hikes at as high as 50 or 75 basis points to quell rising inflation and bring the funds rate to 3.5% by yearend.
Mr. Ricafort said the weaker peso also reflects market uncertainties following the detection of an Omicron subvariant in the country.
Health authorities last week confirmed the local transmission of a more contagious Omicron subvariant that has become dominant in the United States.
BA.2.12.1 can evade immune protections and is highly transmissible, according to health experts. The Philippines has detected 17 cases of the subvariant, 16 of which were locally acquired while one was a returning Filipino who lives in central Philippines.
The Health department also detected a case of Omicron subvariant BA.4 in a Filipino citizen who arrived in the country from the Middle East on May 4.
For Tuesday, Mr. Ricafort gave a forecast range of P52.15 to P52.35 per dollar. — K.B. Ta-asan with Reuters
