Peso may test P62 versus dollar on Iran war, local political turmoil
By Aaron Michael C. Sy, Reporter
THE PESO could weaken further and test the P62-a-dollar level this week as the unresolved US-Israel war on Iran continues to boost demand for the greenback and drive oil prices higher, while political tensions at home weigh on sentiment.
The local unit closed at a fresh record low of P61.721 a dollar on Friday, weakening by 8.1 centavos from Thursday’s P61.64 finish, based on Bankers Association of the Philippines data posted in its website.
Its intraday low of P61.73 was also near the previous all-time low of P61.75 recorded on April 30. Week on week, the peso declined by P1.108.
Since the start of the year, the currency has depreciated by 4.75% or P2.93.
A trader said the peso weakened on rising oil prices and stronger US retail data, which supported the dollar.
Reuters reported that the dollar strengthened for a fifth straight session on Friday and was on track for its biggest weekly gain in two months as investors increasingly expected the US Federal Reserve to keep rates elevated or possibly tighten further.
The benchmark 10-year US Treasury yield climbed to its highest level in a year as inflation concerns persisted amid supply disruptions linked to the Middle East war.
The dollar index, which measures the greenback against a basket of currencies, rose to 99.27.
Meanwhile, global oil prices surged further after renewed tensions surrounding the Strait of Hormuz dampened hopes for a ceasefire between the US and Iran.
West Texas Intermediate crude rose above $105 per barrel, while Brent crude climbed past $109.
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said local political turmoil also weighed on the peso.
The Senate is set to convene as an impeachment court for the trial of Vice-President Sara Duterte-Carpio following moves in the House of Representatives to remove her from office.
Political tensions also intensified after Senator Ronald “Bato” M. dela Rosa resurfaced after months in hiding over a possible arrest tied to the International Criminal Court investigation.
The trader expects the peso to test the P62 level this week as the prolonged Middle East war and disruptions in the Strait of Hormuz continue to support higher oil prices and the dollar.
The trader expects the peso to move at P61.50 to P62 a dollar this week, while Mr. Ricafort sees it ranging from P61.40 to P61.90.
