Peso inches higher as oil prices drop sharply

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THE PESO finished trading at P50.96 per dollar on Monday. — BW FILE PHOTO

THE PESO started the week slightly stronger against the dollar as oil prices hit an 18-year low and despite cautious trading due to market jitters over the enhanced community quarantine in Luzon.

The local unit finished trading at P50.96 per dollar on Monday, appreciating by four centavos from its P51 close on Friday, according to data from the Bankers Association of the Philippines.

The peso opened flat at P51 versus the dollar on Monday. Its weakest showing for the day was at P51.10, while its intraday best was at P50.85 against the greenback.

Dollars traded went down to $315.35 million from $456.2 million on Friday.

A trader said the peso gained against the greenback despite cautious trading amid market fears over the recent enhanced community quarantine implemented in Luzon to prevent further spread of the outbreak.

“The peso strengthened a little bit pero (but) so far we’re really not seeing a lot of activities in dollar peso as prices are still very wide given this quarantine scenario,” the trader said in a phone call.

“I think the market is very cautious at the moment so positioning is very minimal,” the trader added.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the peso’s slight appreciation to the latest oil price slip.

“The peso closed stronger after the latest decline in global oil prices to among lowest levels in 17-18 years which could help ease inflation,” Mr. Ricafort said in a text message.

Reuters reported that crude oil benchmarks sharply dropped on Monday, with Brent succumbing to its lowest since November 2002, on the back of the escalating pandemic and as the price war between Saudi Arabia and Russia continues.

Brent futures were down by 6.7% to $23.25 a barrel as of 0249 GMT, after earlier dropping to $23.03, the lowest since November 2002.

Meanwhile, US West Texas Intermediate crude futures fell to as low as $19.92, near an 18-year low hit earlier this month, and was last trading down 5.4% or $1.17 at $20.34 a barrel.

On Friday, Saudi Arabia said it has not engaged in discussions with Russia about balancing oil markets despite pressures from the US to cease their price war given the current pandemic situation that has taken its toll on oil demand.

Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno has said March inflation could slow to 2.4% due to the continued drop in oil prices as well as the price freeze amid the lockdown.

If realized, this would be slower than the 2.6% print seen in February and the 3.3% seen in March last year.

For today, the trader gave a forecast range of P50.70 to P51.20 per dollar, while Mr. Ricafort sees the peso moving around the P50.80 to P51.10 levels. — Luz Wendy T. Noble with Reuters