THE PESO rose against the dollar on Monday amid lower oil prices and the greenback’s decline versus other major currencies. — BW FILE PHOTO
THE PESO strengthened on Monday as the dollar eased versus other major currencies and amid a decline in oil prices.
The local unit closed at P56.10 per dollar on Monday, up by 18 centavos from its P56.28 finish on Friday, based on data from the Bankers Association of the Philippines.
The peso opened Monday’s session at P56.20 versus the dollar. Its weakest showing was at P56.25, while its intraday best was at P56.10 against the greenback.
Dollars exchanged inched down to $722.2 million on Monday from $789 million on Friday.
The peso strengthened on Monday amid the easing of the dollar against global currencies, Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said in a Viber message.
“Peso also stronger after global oil prices easing to the lowest in about 3.5 months, with NYMEX crude oil price at $93 per barrel levels that could help ease inflation and lower the country’s oil import bill, as well as the recent easing of the benchmark 10-year US Treasury yield to 2.79%, among 2-month lows that could help reduced borrowing costs/financing costs,” Mr. Ricafort added.
The US dollar strengthened against the Australian and New Zealand dollars during Asian trading, although this move eased as European markets opened, Reuters reported. At 0715 GMT, the Australian dollar was flat against the greenback, while the New Zealand dollar was down 0.2% at $0.6242.
Versus the Japanese yen, the dollar was up 0.2% at 136.35.
The dollar index was at 106.760, having last week fallen from the two-decade high of 109.290 it hit in mid-July and analysts expect it to remain in demand.
Meanwhile, Brent crude futures for September settlement fell $1.19 or 1.2% to $102.01 a barrel by 0645 GMT, down for a fourth day.
US West Texas Intermediate crude futures for September delivery slid $1.33 or 1.4% to $93.37 a barrel, also down for a fourth day.
MUFG Bank Currency Analyst Sophia Ng said in a research note that the dollar weakened last week on the back of risk appetite improvements as well as a rally in the euro as the European Central Bank (ECB) delivered its rate hike on Thursday.
“The USD Index fell by 1.2% last week on the back of improvements in risk appetite due to stronger-than-expected US corporate earnings reports, in addition to a rally in the EUR (euro) on the ECB’s bigger-than-expected 50 bps (basis points) hike instead of 25 bps,” Ms. Ng said.
The ECB raised its benchmark deposit rate by 50 bps to 0%, its first rate increase in 11 years and a departure from eight years of negative interest rates, to rein in runaway inflation. It also raised its main refinancing rate to 0.50% and signaled more hikes.
However, the dollar’s weakness is unlikely to last as the US Federal Reserve is widely anticipated to raise its benchmark rate by at least 75 bps in its meeting this Wednesday, Ms. Ng said.
“Further, our London team expects the Fed to keep the possibility of another 75 bps hike in September alive at this meeting -— yet another factor that will help support the USD the week ahead,” she added.
“The peso strengthened after the downbeat European manufacturing and services reports last week fueled recession worries anew,” a trader said in an e-mail.
“The local currency might appreciate further as the greenback might lose appeal from a potentially downbeat US consumer confidence report [on Tuesday],” the trader added.
For Tuesday, Mr. Ricafort gave a forecast range of P55.95 to P56.20 against the dollar, while the trader expects a narrower band in which the peso might move within P56 and P56.20. — Keisha B. Ta-asan with Reuters