Peso plunges to new record low vs dollar

MANILA, Philippines — The peso slipped to another record low against the dollar yesterday as rising oil prices fueled concerns over global inflation and tighter monetary policy.

The local currency closed at 62.625 to $1, weakening by 3.9 centavos from Monday’s 62.586 finish, based on Bankers Association of the Philippines data.

This breached the previous record closing low of 62.59 on Sept. 4.

The peso opened at 62.57 and traded between 62.48 and 62.675. Trading volume rose by 16.8 percent to $1.39 billion from $1.19 billion in the previous session.

UnionBank chief economist Ruben Carlo Asuncion said Brent crude, a global oil benchmark, approached $100 per barrel, weighing on investor appetite for risk amid renewed concerns over inflation and tighter monetary policy.

“As a major oil importer, the Philippines remains sensitive to higher energy prices because of their implications for inflation and the country’s import bill,” Asuncion said.

Still, the economist said the peso’s relatively narrow trading range and stronger average exchange rate during the session suggested that selling pressure remained contained, partly as the broader dollar held steady.

According to Asuncion, near-term movements would likely depend on oil prices, developments in the Middle East and Friday’s US inflation report.

Jonathan Ravelas, senior adviser at Reyes Tacandong & Co, said investors are favoring dollar assets amid expectations that US interest rates will remain elevated, while higher oil prices are increasing the Philippines’ import bill and demand for dollars.

Ravelas expects the peso to trade between 62.60 and 62.90 to $1 in the near term, potentially testing new lows.

However, he does not expect a disorderly decline, citing the Bangko Sentral ng Pilipinas’ policy tools and reserves to manage excessive volatility.