Peso up on easing oil prices

THE PESO strengthened versus the dollar on Monday after global oil prices eased, erasing all gains posted since the start of the Russia-Ukraine war.

The local unit closed at P56.64 against the greenback on Monday, stronger by three centavos from its P56.67 finish on Friday, data from the Bankers Association of the Philippines showed.

The peso opened Monday’s session at P56.80 per dollar. Its intraday low was at P56.90, while its strongest showing was at its close of P56.64 against the greenback.

Dollars traded went down to $806.9 million on Monday from $849 million on Friday.

The peso strengthened after global oil prices eased to new 11-months lows, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Brent crude dropped $2.43 or 2.9% on Monday to trade at $81.20 a barrel at 0731 GMT, after diving more than 3% to $80.61 earlier in the session, its lowest since Jan. 4, Reuters reported.

US West Texas Intermediate (WTI) crude slid $2.16 or 2.8% to $74.12 a barrel. It fell as far as $73.60 earlier, its lowest since Dec. 22, 2021.

Both benchmarks have posted three consecutive weekly declines. Brent ended the latest week down 4.6%, while WTI fell 4.7%.

This is due to the continued lockdowns in China, one of the world’s biggest importers of oil and major global commodities, Mr. Ricafort said.

“The peso was mostly weaker for the trading session, tracking regional weakness before closing almost unchanged from last Friday,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in a Viber message.

“Asian foreign exchange weighed down by concerns about growing unrest in China and what that might mean for growth in the near term,” he said.

China has stuck with President Xi Jinping’s zero-COVID policy even as much of the world has lifted most restrictions.

For Tuesday, Mr. Mapa said the market will take its cue from global developments, especially from US Federal Reserve Chair Jerome H. Powell’s speech on Wednesday, where he is expected to give an outlook for the US economy that could provide hints on their next policy move.

The Fed has so far increased borrowing costs by 375 basis points since March, bringing the fed funds rate to a 3.75-4% range. It will update its interest rate and economic forecasts at their policy meeting on Dec. 13-14

Mr. Ricafort gave a forecast range of P56.55 to 56.75 per dollar for Tuesday. — KBT with Reuters