Peso weakens against the dollar on Powell remarks, rising oil prices

 Peso weakens against the dollar on Powell remarks, rising oil prices

THE PESO dropped against the dollar for the third straight day on Tuesday on hawkish comments from the US Federal Reserve chief and as oil prices continued to surge.

The local unit closed at P52.44 per dollar, weakening by nine centavos from its P52.35 finish on Tuesday, based on data from the Bankers Association of the Philippines.

The peso opened weaker on Tuesday’s session at P52.44 against the dollar. Its best showing was at P52.385, while its intraday low was at P52.47 versus the greenback.

Dollars exchanged rose to $953.1 million on Tuesday from $599.8 million on Monday.

A trader said in an e-mail that the peso fell against the dollar amid hawkish comments from US Fed Chair Jerome H. Powell.

The US central bank must move “expeditiously” to bring too-high inflation to heel, Mr. Powell said on Monday, adding that it could use bigger-than-usual interest rate hikes if needed to do so, Reuters reported.

Fed policy makers last week raised interest rates for the first time in three years and signaled ongoing rate hikes ahead. Most of them see the short-term policy rate — pinned for two years near zero — at 1.9% by the end of this year, a pace that could be achieved with quarter-percentage-point increases at each of their next six policy meetings.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message that the peso weakened due to rising oil prices.

Oil futures extended gains on Tuesday morning on news that some European Union members were considering imposing sanctions on Russian oil and as attacks on Saudi oil facilities sent jitters through the market, Reuters reported.

Brent crude rose by 2.9% to $118.93 per barrel. US crude ticked up by 2.2% to $114.76 a barrel.

Mr. Ricafort expects the peso to move between P52.35 and 52.50 on Wednesday while a trader gave a forecast range of P52.35 to P52.60.

A second trader sees the local unit moving within the P52.25 to P52.50 range, but warned that continued trade at the P52 mark could signal a decline to the P53-per-dollar level. — T.J.Tomas with Reuters