Peso strengthens amid decline in oil prices, dollar

The peso rose against the dollar on Thursday amid easing global crude oil prices and a weaker greenback.

The local unit closed at PHP 55.48 per dollar on Thursday, strengthening by seven centavos from its PHP 55.55 finish on Wednesday, Bankers Association of the Philippines data showed.

The peso opened Thursday’s session weaker at PHP 55.65 against the dollar. Its intraday best was at PHP 55.48, while its weakest showing was at PHP 55.69 versus the greenback.

Dollars exchanged fell to USD 1.03 billion on Thursday from USD 1.53 billion on Wednesday.

The peso strengthened on Thursday due to falling global crude oil prices, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The peso appreciated tracking the decline in international oil prices amid concerns on the global economic outlook,” a trader likewise said in an e-mail.

Oil prices were subdued having slid on Wednesday as concerns over supplies eased after major shippers announced they would return to the Red Sea, Reuters reported.

Brent edged up 10 cents to USD 79.75 a barrel, while US crude fell 3 cents to USD 74.08 per barrel.

The peso was supported by a weakening dollar amid market expectations of rate cuts by the US Federal Reserve next year, Mr. Ricafort added.

The dollar nursed steep losses on Thursday and was headed for a yearly decline on expectations that 2024 will bring deep rate cuts, Reuters reported.

The dollar index, which measures the US currency against six rivals, fell to a fresh five-month low of 100.76. The index is on course for a 2.6% decline this year, snapping two straight years of strong gains.

Investor focus remains on the timing of the interest rate cuts from the Federal Reserve, with markets pricing in an 88% chance of a cut in March 2024, according to CME FedWatch tool. Futures imply more than 150 basis points of Fed easing next year.

For Friday, the trader said the peso could strengthen further amid year-end demand for the currency.

The trader sees the peso moving between PHP 55.35 and PHP 55.60 per dollar on Friday, while Mr. Ricafort sees it ranging from PHP 55.35 to PHP 55.55. — AMCS with Reuters