Peso rises on lower oil prices

peso rises on lower oil prices - Peso rises on lower oil prices

THE PESO strengthened versus the greenback on Wednesday after oil prices slipped anew and with positive market sentiment due to dovish remarks from US officials.

The local unit finished trading at P50.65 per dollar yesterday, appreciating by five centavos from its P50.70 close on Tuesday, according to data from the Bankers Association of the Philippines.

The peso opened the session at P50.70 versus the dollar. Its weakest showing was at P50.75 while its intraday best was at P50.615 against the greenback.

Dollars traded increased to $919.2 million from the $567.8 million traced on Tuesday.

The peso’s gains came after a fresh decline in oil prices, said Michael L. Ricafort, chief economist of Rizal Commercial Banking Corp.

“The peso closed stronger for the second straight day after a downward correction in global crude oil prices,” Mr. Ricafort said in a text message.

Reuters reported that oil prices slipped on Wednesday on market concerns regarding the lasting economic fallout of the coronavirus disease 2019 (COVID-19). This outweighed signs of recovering demand and production cuts already imposed by major producers.

Brent crude futures for July delivery traded at $34.54 per barrel, down by 11 centavos or 0.3% as of 0031 GMT. US West Texas Intermediate crude futures for July also slipped by 13 centavos, or 0.4% to $31.83 a barrel.

The July contract became the front month after WTI futures for June expired on Tuesday, avoiding the chaos of last month’s May expiry when prices slid into negative territory.

Meanwhile, a trader attributed the peso’s stronger close after dovish signals from key US officials.

“The peso appreciated after [US] Fed[eral Reserve] Chairman Jerome Powell and [US Treasury] Secretary Steven Mnuchin remained dovish in their remarks before the US Senate Banking Committee,” the trader said in an e-mail.

On Tuesday, Mr. Powell said new Treasury-backed Fed lending programs meant for midsize companies and municipal bond markets would be up and running by the beginning of June. He added that the Fed is looking to extend access to credit facilities to additional borrowers, including to states with smaller populations.

Both Mr. Powell and Mr. Mnuchin said the nearly $3 trillion in federal rescue programs unveiled over the past two months were working to support an economy devastated by the novel coronavirus. The officials faced tough questions over whether the government’s plan to quickly reopen the economy could be detrimental for low-wage workers with little protection against the virus.

For today, Mr. Ricafort sees the peso moving around the P50.50 to P50.75 levels while the trader expects the local unit to trade at a range of P50.50 to P50.70. — L.W.T. Noble with Reuters

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