Peso plunges to new record low vs dollar
The peso slipped to another record low against the dollar yesterday as rising oil prices fueled concerns over global inflation and tighter monetary policy.
Manila, Philippines — The peso experienced its lowest point against the dollar as surging oil prices raised worries about global inflation and stricter monetary policy, according to data from the Bankers Association of the Philippines. The local currency closed at 62.625 to $1, a decline of 3.9 centavos from Monday’s closing at 62.586, marking a breach of the previous record low of 62.59 set on September 4.
The peso began the day at 62.57 and fluctuated between 62.48 and 62.675. Trading activity increased by 16.8 percent, reaching $1.39 billion, compared to $1.19 billion in the previous session. UnionBank's chief economist, Ruben Carlo Asuncion, stated that Brent crude, a global oil benchmark, neared $100 per barrel, negatively impacting investor appetite for risk due to heightened concerns about inflation and tighter monetary policy.
As uncials explained, being a major oil importer, the Philippines is particularly vulnerable to higher energy prices, which can affect inflation and the country's import bill. Despite this, Asuncion noted that the peso's trading range remained relatively narrow, and its average exchange rate for the day was stronger, suggesting that selling pressure was still limited.
Factors such as the broader dollar's stability, the lack of oil price fluctuations, and the Philippines' upcoming US inflation report are anticipated to influence near-term movements. Meanwhile, Jonathan Ravelas, a senior adviser at Reyes Tacandong & Co, stated that investors are leaning towards dollar assets due to expectations of sustained elevated US interest rates.
Higher oil prices, which increase the Philippines' import bill and the demand for dollars, are also contributing to this preference. Ravelas anticipates the peso to trade within a range of 62.60 to 62.90 to $1 in the near term, potentially reaching new lows. However, he doesn't foresee a disorderly decline, attributing this to the Bangko Sentral ng Pilipinas' policy tools and reserves to mitigate excessive volatility.
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.
