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Peso weakens versus the dollar as oil prices correct

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THE PESO depreciated against the greenback on Wednesday as oil prices corrected and due to dollar demand from corporate clients.

The local unit ended at P51.14 per dollar yesterday, weakening by 24 centavos from its P50.90 close on Tuesday, according to data from the website of the Bankers Association of the Philippines.

The peso opened the session at P50.85 per dollar. The currency’s weakest showing for the day was at P51.27, while its strongest was at P50.80 versus the greenback.

Dollars traded climbed to $642.6 million on Wednesday from the $563.9 million recorded on Tuesday.

A trader said corporate demand was a major factor in currency trading on Wednesday.

“Dollar weakened after lunch but for some reason, the peso ended weaker, partly on corporate demand as they start to fuel it up during this period,” the trader said in a phone call.

Based on historical trends, the trader said corporate demand starts to rise towards the second quarter as clients tend to be more “quiet” at the start of the year.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the weaker peso came after gains in oil prices.

“The peso exchange rate closed weaker, partly due to some healthy upward correction in global oil prices,” Mr. Ricafort said in a text message.

Reuters reported that oil prices saw gains for a third session on Wednesday, powered by hopes that Washington could soon approve an aid package to mitigate the impact of the pandemic.

US crude was at $25.24 per barrel early in the session and was at $24.82 per barrel, up by 3.4$ or 81 cents as of 4:12 GMT.

Meanwhile, Brent crude was trading at $27.90 a barrel, up by 2.8% after rising to a high of $28.29.

Oil prices have fallen by about 45% so far in March as demand weakens worldwide with more lockdowns imposed to arrest the spread of coronavirus disease.

The White House and Senate have agreed on the $2-trillion stimulus package that would include direct subsidies for Americans as well as benefits for some small businesses that have been hit by the pandemic.

The virus has already sickened more than 420,000 around the world and caused the death of over 18,000.

In the Philippines, infected patients rose to 552 as of Tuesday while the death toll was at 35.

For today, the trader expects the peso to move around the P50.85 to P51.30 levels, while Mr. Ricafort gave a forecast range of P50.95 to P51.25. — L.W.T. Noble with Reuters





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