Currencies 2 MIN READ

Peso inches higher vs dollar on oil price drop, stock mart gains

May 2, 2023By BusinessWorld

THE PESO inched up against the dollar on Tuesday due to lower global oil prices as well as gains at the local stock market.

The local currency closed at PHP 55.34 versus the dollar on Tuesday, rising by four centavos from Friday’s PHP 55.38 finish, data from the Bankers Association of the Philippines’ website showed.

The local unit opened Tuesday’s session weaker at PHP 55.48 per dollar. Its worst showing for the day was at PHP 55.50, while its intraday best was at PHP 55.26 versus the greenback.

Dollars traded went down to USD 1.057 billion on Tuesday from the PHP 1.24 billion recorded on Friday.

The local currency was supported by a drop in global crude oil prices and the Philippine Stock Exchange index’s (PSEi) rise, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Oil prices fell in Asian trade on Tuesday, extending losses seen in the previous session, as weak economic data from China and expectations of a US interest rate increase weigh on the market.

Brent crude was down 0.3% or 24 cents to PHP 79.07 a barrel by 0615 GMT, while US West Texas Intermediate crude fell 0.3% or 25 cents to USD 75.41 a barrel. Both benchmarks fell by more than USD 1 in their last session.

Meanwhile, the PSEi went up by 47.61 points or 0.71% to close at 6,672.69 on Tuesday. The all shares index also gained 14.16 points or 0.4% to end at 3,546.69.

The peso mostly traded sideways with a downward bias amid a lack of catalysts, a trader said in a Viber message.

For Wednesday, the trader said the peso could be supported by expectations of a pause in the Bangko Sentral ng Pilipinas’ (BSP) tightening cycle amid easing inflation.

BSP Governor Felipe M. Medalla said last month that if inflation eased further in April, the Monetary Board could consider pausing its rate hikes at its May 18 meeting.

The central bank has raised borrowing costs by a total of 425 basis points since May 2022.

On Wednesday, the trader sees the peso trading between PHP 55.30 and PHP 55.60 against the dollar, while Mr. Ricafort expects it to move from PHP 55.20 to PHP 55.40. — By A.M.C. Sy with Reuters

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