February 4, 2023

Filipino Guardian

Sentinels of Filipino Free Press

Peso rises on fall in oil

FILIPINO STAR/WALTER BOLLOZOS

The PESO continued to gain against the dollar on Wednesday on lower global oil prices and better Philippine jobs and factory data.

The local currency closed at Ps55.45 against the greenback on Wednesday, up 52.5 centavos from Ps55.975 per dollar on Tuesday, based on data from the Bankers Association of the Philippines.

The peso opened stronger at P55.85 per dollar on Wednesday, which was also its weakest point. Its intraday high was its close of P55.45 against the greenback.

Dollars traded on Wednesday rose to $1.16 billion from $776.56 million the previous day.

Rizal Commercial Banking Corp. chief economist Michael L. Ricafort said the peso ended stronger on Wednesday as global oil prices fell to their lowest level in nearly a year on Tuesday.

Brent crude futures were up 3 cents, or 0.04%, at $79.38 a barrel by 0717 GMT on Wednesday after falling below $80 for the second time this year on Tuesday.

US crude futures traded mostly sideways, falling 9 cents, or 0.12%, to $74.16 a barrel.

Brent’s plunge on Tuesday was its biggest daily drop since late September, trading in a $62 range this year.

“The peso was also stronger after most of the recent mix of better Philippine economic data,” said Mr. Ricafort.

The unemployment rate fell to a record low of 4.5% in October, according to the PSA Labor Force Survey. It was below 5% in September and 7.4% in October last year.

Meanwhile, preliminary results from the PSA’s Monthly Integrated Survey of Selected Industries showed the production volume index rose 5.1% in October from a year earlier.

It was the fifth consecutive month of growth for the sector after falling 0.5% in May. Year-to-date, factory production increased by 17.4%.

“The peso appreciated as the higher-than-expected local inflation report bolstered expectations of a stronger BSP (Bangko Sentral ng Pilipinas) rate hike this month,” a trader said in an email.

Headline inflation accelerated to 8% yoy in November, beating the GNP target of 2-4% for the eighth straight month. This was faster than October’s 7.7% and 3.7% a year ago.

The annual average thus rose to 5.6%. This is still below the average GDP inflation forecast of 5.8% for this year.

The BSP has hiked interest rates by 300 basis points since May in a bid to curb rising prices. The last meeting of the Monetary Board for the year is December 15th.

For Friday, “the local currency could gain strength ahead of a potentially lower US producer inflation report,” the trader said.

Philippine financial markets are closed on Thursday for the feast of the Immaculate Conception of Mary.

Mr. Ricafort sees the peso settling between P55.30 and 55.60 on Friday while the trader said it could range between P55.30 and P55.55 per dollar. —KB Ta-asan with Reuters