THE PESO weakened on Monday as sentiment favored the greenback after data on US jobs as well as the extension of oil production cuts.
The local unit finished trading at P49.90 per dollar on Monday, depreciating by 10 centavos from its close of P49.80 on Friday, according to data from the Bankers Association of the Philippines.
The peso opened Monday’s session at P49.83 per dollar. Its weakest showing was at P49.97 while its intraday best was at P49.80 against the greenback.
Dollars traded dropped to $651.3 million on Monday from the $1.011 billion seen on Friday.
A trader said market sentiment for the peso dimmed after major oil exporters opted to continue production cuts.
“The production cuts in May gave way to some price recoveries so we expect oil prices will continue to be pushed upwards by this move, which may have given that risk-off factor for the peso,” the trader said in a phone call.
Reuters reported that the Organization of the Petroleum Exporting Countries (OPEC)together with Russia and allies decided to extend oil production cuts until end-July.
“Demand is returning as big oil-consuming economies emerge from pandemic lockdown. But we are not out of the woods yet and challenges ahead remain,” Saudi Energy Minister Prince Abdulaziz bin Salman told the video conference of OPEC+ ministers.
The group also called on other countries that have gone beyond their production quotas in May and June such as Nigeria and Iraq to compensate through extra cuts from July to September.
Meanwhile, another trader attributed the peso’s weakness to better US jobs data released late last week.
“The peso weakened following the surprising rebound in US nonfarm payrolls data which reflected new 2.5 million jobs last month,” the second trader said in an e-mail.
The US Labor department reported on Friday that nonfarm payrolls grew by 2.509 million jobs in May after a record decline of 20.7 million in April.
With this, the unemployment rate fell to 13.3% from the post World War II high of 14.7% in April.
The first trader expects the peso to move between the P49.75 to P50 band versus the dollar while the second trader sees the peso moving between the P49.85 to 50.05 levels this Tuesday. — L.W.T. Noble with Reuters