Peso drops to near one-month low as Mideast war jolts markets
THE PESO fell to a near one-month low against the dollar on Wednesday as the Middle East conflict continued to weigh on market sentiment.
The local unit dropped by 13.5 centavos to close at P58.57 against the greenback from its P58.435 finish on Tuesday, data from the Bankers Association of the Philippines showed.
This was its weakest finish in almost a month or since it ended at P58.585 a dollar on Feb. 6.
The peso opened Wednesday’s trading session lower at P58.50 per dollar. It climbed to a high of P58.45, while its intraday low was at P58.649 versus the greenback.
Dollars traded went down to $1.774 billion from $1.927 billion on Tuesday.
A trader said by phone that the war in the Middle East and its impact on oil prices dragged market sentiment, weighing on the peso.
The local currency sank further as the dollar was generally stronger as increasing oil prices heightened inflation expectations and reduced monetary easing bets, Rizal Commercial banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The possible large increase in local fuel pump prices could lead to higher inflation and inflation expectations as well as second-round inflation effects if the war on Iran drags on,” he added.
For Thursday, the trader sees the peso moving between P58.30 and P58.70 per dollar, while Mr. Ricafort expects it to range from P58.45 to P58.65.
The dollar held firm near a three-month high in Asia on Wednesday, with investors retreating from the euro as the conflict in the Middle East sparked fears of a sustained rise in energy prices and took a heavy toll on stock markets, Reuters reported.
The euro slipped 0.2% to $1.1590, extending losses into a third day after earlier hitting its weakest since late November. That followed data released on Tuesday which showed euro zone inflation at a higher-than-expected level in February before the start of the Iran conflict.
Financial markets resumed their sell-off on Wednesday as growing fears of a surge in inflation rippled across stocks and bonds after Israeli and US forces pounded targets across Iran, prompting a rush for cash among investors.
Global oil and gas prices have jumped as the strikes on Iran disrupts energy exports from the Middle East, with Tehran’s retaliatory attacks on ships and energy facilities closing navigation in the Gulf and forcing production stoppages from Qatar to Iraq.
The benchmark Brent crude oil contract gained 1.9% on Wednesday to $82.94 per barrel, hitting the highest since July 2024 and taking gains since Friday to 14%. European gas prices are up 70% since the end of last week.
The US dollar index, which measures the greenback’s strength against a basket of six currencies, was up 0.1% at 99.208, after earlier reaching its strongest level since Nov. 28.
Against the yen, the dollar was down 0.2% at 157.52 yen. — A.M.C. Sy with Reuters
