Peso weakens vs the dollar on higher oil prices

THE PESO weakened versus the greenback on Thursday as oil prices soared to multi-year highs.

The local unit closed at P50.88 per dollar on Wednesday, shedding 23 centavos from its P50.65 finish on Tuesday, based on data from the Bankers Association of the Philippines.

The peso opened Wednesday’s session a tad stronger at P50.64 a dollar. Its weakest showing was at P50.90, while its intraday best was at P50.61 against the greenback.

Dollars exchanged dropped to $963 million on Wednesday from $1.019 billion on Tuesday.

The peso depreciated on demand for the safe-haven dollar as oil prices soared after major producers and their allies maintained their targeted output pace despite calls to beef up production amid growing demand for fuel, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Oil prices surged on Wednesday after the Organization of the Petroleum Exporting Countries and their allies refused to boost production amid concerns over tight energy supply globally, Reuters reported.

Brent crude rose to $83.47 on Wednesday, the highest since October 2018, before settling at $82.52 per barrel by 0813 GMT. Meanwhile, US crude climbed to $79.78, the highest since November 2014, before going down 10 cents to $78.83.

Meanwhile, a trader said peso-dollar trading was also affected by expectations of a strong US new private jobs report overnight.

The ADP National Employment Report for August was set to be released on Wednesday. Private payrolls rose by 374,000 jobs in July.

For Thursday, Mr. Ricafort gave a forecast range of P50.75 to P50.95 per dollar, while the trader expects the local unit to move within P50.80 to P51 versus the greenback. — LWTN with Reuters