THE PESO retreated versus the greenback for the third straight day due to higher oil prices and as the market was waiting for the policy decision of the US Federal Reserve.
The local unit closed at P48.09 per dollar on Wednesday, shedding six centavos from its P48.03 finish on Tuesday, data from the Bankers Association of the Philippines showed.
The peso started the session at P48.08 per dollar. Its weakest showing was at P48.19 while its intraday best was at P48.05 against the greenback.
Dollars exchanged slipped to $1.151 billion on Wednesday from $1.158 billion on Tuesday.
The peso weakened due to higher dollar demand and as higher oil prices could increase the country’s import bill, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.
Reuters reported that oil prices continued to increase due to the recovery in demand and a drop in US crude inventories. Brent crude rose 29 cents or 0.4%, at $74.28 a barrel by 0815 GMT on Wednesday, and earlier reached $74.73, the highest since April 2019.
Meanwhile, a trader said the market was risk-off mode due to US data and ahead of the latest monetary policy decision of the Fed.
“The peso depreciated following the stronger-than-expected US producer inflation report and caution ahead of the Fed policy decision,” the trader said in an e-mail.
The US Labor department on Tuesday reported that its producer price index for final demand rose by 0.8% in May after a 0.6% rise in April. In the 12 months through May, the index rose 6.6%, which is the quickest since November 2010.
Meanwhile, the Fed was set to end a two-day policy meeting overnight, where it was expected to keep rates steady and discuss the unwinding of its asset purchase program.
For today, Mr. Ricafort expects the local to move within the P48.03 to P48.18 band, while the trader gave a wider forecast range of P48.00 to P48.20 per dollar. — LWTN with Reuters