Peso climbs as oil prices drop

THE PESO rose against the dollar on Thursday as global crude oil prices dropped to two-week lows, helping ease inflation concerns.

The local currency closed at P54.87 versus the greenback on Thursday, appreciating by 31 centavos from Wednesday’s P55.18 finish, Bankers Association of the Philippines data showed.

The peso opened Thursday’s session at P55.12 per dollar. Its intraday best was its closing level of P54.87, while its weakest showing was at P55.15 against the greenback.

Dollars traded rose to $1.109 billion on Thursday from $1.006 billion on Wednesday.

The peso strengthened as global crude oil prices eased to two-week lows, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The peso appreciated, driven by profit taking from market participants and tracking the decline in global crude oil prices,” a trader said in an e-mail.

Oil prices fell by $2 per barrel to their lowest in two weeks on Wednesday, Reuters reported.

Brent crude futures settled $2.45 or 3% lower at $80.60 per barrel. West Texas Intermediate crude futures dropped by $2.41 or 3% to end at $74.05 a barrel.

The settlement levels were the lowest for both benchmarks since Feb. 3.

Prices dropped on growing concerns over oil demand as the US Federal Reserve aims to keep hiking rates to reduce surging consumer prices, based on the minutes of its meeting earlier this month.

The US central bank hiked its target interest rate by 25 basis points (bps) to a range between 4.5% and 4.75% during its Jan. 31 to Feb. 1 meeting. This brought cumulative increases since March 2022 to 450 bps.

The Fed’s next policy meeting is on March 21-22.

The trader said the peso will likely strengthen further on Friday amid an expected downward revision to the fourth-quarter US gross domestic product report.

The trader expects the peso to trade between P54.70 and P54.95 against the greenback on Friday, while Mr. Ricafort gave a forecast range of P54.80 to P55. — AMCS