THE PESO slipped to a new record low versus the dollar on Tuesday on renewed global inflation concerns after petroleum exporting countries said they would cut oil production.
The local unit closed at a fresh all-time low of P57 per dollar on Tuesday, inching down by less than a centavo from its P56.999 finish on Monday, Bankers Association of the Philippines data showed. Year to date, the peso has weakened by 11.76% or P6 from its P51-per-dollar close on Dec. 31, 2021.
The local unit opened Tuesday’s trading session at P56.888 against the dollar. The peso’s weakest showing was its close of P57, while the intraday best was at P56.86 against the greenback.
Dollars exchanged declined to $812.19 million on Tuesday from $976.45 million on Monday.
“The peso settled at the P57 level today amid renewed global inflation concerns after the OPEC+ (Organization of Petroleum Exporting Countries and allies led by Russia) decided to reduce its daily production target by 100,000 barrels this month,” a trader said in an e-mail.
OPEC+ said the cut will help boost prices that have slid on expectations of a global economic slowdown.
Benchmark Brent crude oil has dropped to about $95 a barrel from $120 in June on fears of an economic slowdown and recession in the United States.
On Tuesday, Brent crude futures fell 0.7% to $95.07 a barrel. US crude futures, however, were still up 2.12% at $88.71 a barrel.
Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the peso moved sideways on Tuesday after the slower-than-expected inflation rate in August.
Headline inflation slowed to 6.3% in August from the near four-year high of 6.4% seen in July, the Philippine Statistics Authority (PSA) reported on Tuesday.
While the result was within the Bangko Sentral ng Pilipinas’ (BSP) 5.9-6.7% forecast for the month and below the 6.4% median estimate in a BusinessWorld poll of analysts, it was the fifth consecutive month inflation went beyond the central bank’s 2-4% target. It was also faster than the 4.4% headline print logged in August 2021.
Month on month, inflation picked up by 0.4%.
For the first eight months, inflation averaged 4.9%, faster than 4% in the same period a year prior but below the BSP’s 5.4% forecast for 2022.
The peso was also mostly steady following the latest rollback in local fuel pump prices, Mr. Ricafort added. Petroleum firms announced a P1.55 per liter price decrease for diesel and P2.60 per liter on gasoline following a big-time price hike last week.
For Wednesday, the trader said the peso may rebound ahead of a potentially weaker US non-manufacturing report.
The trader expects the peso to move between P56.90 and P57.10 against the dollar, while Mr. Ricafort gave a forecast range of P56.85 to P57.05. — K.B. Ta-asan
