Peso hits 25th record low as oil, Fed bets weigh

Peso hits 25th record low as oil, Fed bets weigh | Daily Tribune

BAP trading volume, however, fell to $969.22 million from $1.1385 billion on Friday. Monday’s close marks the 25th record low the peso has reached since the escalation of the Middle East conflict in March, an 8.3 percent depreciation in the local currency since 28 February’s P57.66 close.

The currency came under renewed pressure as Brent crude surged above $107 a barrel following fresh attacks involving Iran, Iran-aligned Houthi forces and Saudi energy infrastructure. A meeting between Iran and Gulf Arab states in Oman aimed at discussing the reopening of the Strait of Hormuz was also postponed, raising concerns that disruptions to global energy flows could persist.

For the Philippines, sustained oil prices above $100 a barrel pose risks to inflation and the balance of payments. Higher fuel costs increase the dollar requirements of Philippine importers while raising transportation and production costs that can eventually feed into consumer prices.

The external dollar environment also became less favorable. The US dollar index was around 99.34, while the US 2-year Treasury yield was about 4.61 percent and the 10-year yield remained near 5 percent. Markets were pricing an approximately 86-percent probability of a 25-basis-point Federal Reserve rate hike at this week’s meeting after US August inflation came in hotter than expected.

Higher US yields and a stronger dollar raise the relative attractiveness of dollar assets and tighten global financial conditions, putting additional pressure on emerging-market currencies.

Despite the peso’s weakness, Philippine stocks managed a modest rebound. The broader All Shares Index gained 0.15 percent to 3,363.52, while turnover reached P5.69 billion, down from P5.83 billion on Friday. Market breadth was nearly even, with 96 advancers, 95 decliners and 66 unchanged.

The balanced market breadth suggested that Monday’s PSEi recovery suggested selective buying and bargain hunting rather than a broad-based improvement in sentiment.

Mining and Oil rose 0.38 percent, Services gained 0.36 percent, and Financials and Holding Firms each advanced 0.26 percent. Industrial was the lone decliner, falling 0.31 percent.

Philex Mining Corp. (PX) jumped 8.03 percent to P12.38, while Aboitiz Equity Ventures Inc. (AEV) gained 3.29 percent to P37.70. BDO Unibank Inc. rose 1.22 percent. Atlas Consolidated Mining and Development Corp. (AT) fell 2.33 percent, Apex Mining Co. Inc. declined 1.54 percent and Ayala Corp. lost 1.04 percent.