Peso weakens slightly as oil prices correct following sharp decline

THE PESO depreciated slightly on Wednesday due to a correction with oil prices, even as it has remained relatively resilient, according to analysts.

The local unit ended at P50.55 per dollar on Wednesday, shedding five centavos from its P50.50 finish on Tuesday, according to data from the Bankers Association of the Philippines.

The peso opened the session flat at P50.50 per dollar. Its weakest showing for the day was at P50.56, while its intraday best was at P50.465 versus the greenback.

Dollars traded increased to $934 million from $878 million on Tuesday.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the slight weakness in the peso was due to a correction in oil prices after declining sharply last Monday.

“The peso closed weaker but still among its strongest in two years after the healthy upward correction in global oil prices after the dramatic decline to a new four-year lows,” Mr. Ricafort said in a text message.

Meanwhile, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the peso has nominally weakened, but remained “fundamentally trading strong.”

“It seems that the peso has been immune from the coronavirus lately. Even as the oil price war has ensured between Saudi Arabia and Russia, it has continued to be strong,” Mr. Asuncion said in a text message.

The price of Brent crude futures rose by $1.26, or 3.4%, to $38.48 a barrel while US West Texas Intermediate crude gained $0.91, or 2.7%, to $35.27 a barrel.

Oil prices have recovered nearly a half of the Monday’s 25% loss that was fueled by Saudi Arabia and Russia, the world’s two biggest oil producers.

For today, Mr. Ricafort sees the peso playing around the P50.40 to P50.70 levels, while Mr. Asuncion gave a thinner forecast range of P50.40 to P50.60.

Meanwhile, Indonesia’s rupiah fell on Wednesday after the country reported its first coronavirus-related death, while other Asian currencies traded in a thin range due to the uncertainty over proposed government measures to limit the economic impact of the virus.

The market has been hoping for concrete details of US President Donald Trump’s promise for “very major” stimulus moves, but the lack of an announcement has left investors hanging.

“This could set the direction of risk appetite, and thus Asian currencies, in the short-term. Markets are trading day by day, assessing the severity and spread of COVID-19 globally,” said Chang Wei Liang, an FX strategist at Mizuho Bank.

The dollar fell more than 1% against the safe-haven yen.

In Indonesia, the central bank governor said the outlook for economic growth this year could be lowered when it holds its policy meeting next week.

The rupiah dropped 0.3% after the country confirmed its first death due to the virus.

Elsewhere, the South Korean won was little changed against the dollar. The country reported a jump in cases on Wednesday, compared with a day earlier where it saw a decline in the rate of new infections. The Thai baht also fell.

The Indian rupee, emerging from a holiday on Tuesday, advanced 0.4% after losing close to 1% over the last three days. The Singapore dollar and Chinese yuan also gained. The ringgit gained 0.3%. — LWTN with Reuters