The peso declined against the dollar on Wednesday amid expectations that the world’s biggest oil exporters will continue to keep production low.
The local unit closed at PHP 55.45 per dollar on Wednesday, weakening by six centavos from its PHP 55.39 finish on Tuesday, based on Bankers Association of the Philippines data.
The peso opened Wednesday’s session weaker at PHP 55.50 against the dollar. Its intraday best was at PHP 55.44, while its worst showing was at PHP 55.62 versus the greenback.
Dollars exchanged went down to USD 1.21 billion on Wednesday from USD 1.6 billion on Tuesday.
The peso depreciated against the dollar on Wednesday due to higher global crude oil prices recently despite a four-day ceasefire agreement between Israel and Hamas, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The peso weakened as global crude prices moved higher amid views that OPEC+ (Organization of the Petroleum Exporting Countries and their allies including Russia) will remain committed to its cut in production quotas,” a trader said in an e-mail.
Crude prices pared earlier losses to settle nearly flat as investors looked ahead to Sunday’s scheduled OPEC+ meeting, Reuters reported.
US crude dipped by 0.08% to settle at USD 77.77 per barrel, while Brent settled at USD 82.45 per barrel, up by 0.16% on the day.
The peso declined amid dovish signals from the US Federal Reserve after the release of the minutes of its last meeting, Mr. Ricafort said.
Fed officials agreed at their last policy meeting that they would proceed “carefully” and only raise interest rates if progress in controlling inflation faltered, the minutes of the Oct. 31-Nov. 1 gathering showed on Tuesday, Reuters reported.
The US central bank kept its benchmark interest rate steady at the 5.25%-5.5% range for a second straight time during this month’s meeting. It has hiked rates by 525 basis points since it began its tightening cycle in March 2022.
The Federal Open Market Committee will next meet on Dec. 12-13 to review policy.
For Thursday, the trader said the peso could depreciate further amid expectations of strong US jobs data. The trader expects the peso to move between PHP 55.35 and PHP 55.60 per dollar, while Mr. Ricafort sees it ranging from PHP 55.35 to PHP 55.55. — AMCS with Reuters