Peso down ahead of Fed decision, rising oil prices

BW FILE PHOTO

THE PESO weakened versus the greenback on Wednesday as the market was cautious ahead of the policy decision of the US Federal Reserve and with global oil prices increasing amid the European Union’s plan to phase out fuel imports from Russia.

The local unit closed at P52.50 per dollar on Wednesday, losing 13.5 centavos from its P52.365 finish on Monday, Bankers Association of the Philippines data showed.

The market was closed on Tuesday in view of Eid’l Fitr.

The peso opened Wednesday’s session at P52.43 versus the dollar. Its weakest showing was at P52.505, while its intraday best was at P52.39 against the greenback.

Dollars exchanged increased to $1.339 billion on Wednesday from $840.7 million on Monday.

The peso weakened due to cautiousness ahead of the Fed’s policy decision, a trader said in an email.

The Federal Open Market Committee is widely expected to fire off a bigger 50-basis-point (bp) rate hike at its May 3-4 review following the 25-bp increase it made in March.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort in a Viber message said the peso weakened as global oil prices continued to rise.

Reuters reported that global fuel prices rebounded after the European Union said it plans to phase out imports of oil from Russia. This offset the decline caused by demand worries amid the lockdown in China.

Brent crude futures inched up $2.94 or 2.8% to $107.91 per barrel by 0746 GMT. Meanwhile, the West Texas Intermediate crude futures increased $3.02 or 3% to $105.43 a barrel.

European Commission President Ursual von der Leyen outlined the bloc’s plan for a phased oil embargo on Russia as Moscow continued to invade Ukraine. Ms. von der Leyen said they are looking at phasing out supplies of Russian crude within six months and refined products by the end of the year.

For Thursday, Mr. Ricafort gave a forecast range of P52.35 to P52.55 per dollar, while the trader expects the local unit to move within P52.40 to P52.60. — L.W.T. Noble with Reuters

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