Peso nears 62:$1 level
The peso came close to breaching the 62-per-dollar level yesterday as renewed geopolitical tensions and rising crude oil prices drove investors toward the safe-haven dollar, although the local currency recovered some ground before the close.
The Philippine peso approached the critical 62-to-the-dollar threshold on Wednesday, as geopolitical tensions and higher crude oil prices prompted investors to seek the safety of the U.S. dollar. While the local currency managed to rebound slightly before the market closed, closing at 61.815 per dollar, down three centavos from Tuesday’s 61.785 finish.
The peso started the day at 61.85 and plunged to a record low of 61.995 before climbing back up. With increased trading volume of $1.89 billion, greater than the previous day’s $1.34 billion, traders noted the peso's descent was likely a reaction to the temporary U.S.-Iran deal expiring and renewed Middle East turmoil.
Bangko Sentral ng Pilipinas (BSP) could potentially intervene if the peso reaches 62-to-the-dollar, although a breach seems unlikely given the current uncertainty before the central bank’s policy decision on Aug. 27. Jonathan Ravelas, a senior adviser at Reyes Tacandong & Co., suggested investors were positioning themselves ahead of the Federal Reserve’s minutes release, hoping for hints on interest rate changes.
The dollar's strength was attributed to two factors: investor anticipation of Fed guidance and the ongoing concerns over Middle East instability.
Ravelas predicts the peso will hover between 61.60 and 62-to-the-dollar in the near future. UnionBank’s chief economist, Ruben Carlo Asuncion, attributed the currency’s decline to external factors such as increased oil prices, geopolitical tensions, and the dollar’s robust performance. He emphasized the Philippines' vulnerability to global energy price fluctuations due to its heavy reliance on imported oil.
Asuncion maintained that the peso’s trajectory would largely hinge on oil price trends, Middle East developments, and the dollar’s strength, warning that ongoing external pressures could keep the peso pressured near its current levels.
Written by urgent.news from Philippine Star Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
