Philippine peso may build up to 49: $1

THE METROPOLITAN Bank & Trust Co. said on Monday that the Philippine Peso (PHP) may rise further to P49: $1 if the price of crude oil lowers in the world market amid the novel coronavirus disease (COVID-19) outbreak that started in December 2019.

According to Metrobank research analyst Pauline Revillas, the peso may manage to reach 49 if Brent Crude Oil Spot prices fall below the $50 per barrel level.

“A decline in the price of global crude oil could translate to lower demand for US dollars and thus an appreciation bias for the peso, and vice versa,” Revillas said in an interview with Philippine Star.

Revillas noted that changes in the global oil prices can affect the inflation or deflation of the PHP.

“Brent crude spot price and the dollar-peso rate have an inverse relationship albeit not a strong one,” Revillas said.

From the end of 2019, Revillas said that the Bloomberg commodities data shows that Brent crude contract price fell to $54.8 per barrel, while the West Texas Intermediate ( WTI) dropped to $50.5 per

barrel from $67.31 and $59.88, respectively.

Despite the potential impact that the COVID-19 outbreak can cause, Revillas said that crude oil prices are in its lowest level in more than a year.

“The oil market continues to be whipped by updates on the fast-spreading virus, with some analysts saying that the current demand shock has not been seen since the 2008 financial crisis,” she said in the same interview.

China is the world’s largest oil importer and the second largest oil consumer, thus a potential slowdown in demand would have a significant impact on prices.

As the world’s largest oil importer and the second largest oil consumer, the impact on oil price in China can have significant effects as the prices could potentially decline amid worries on the spread of the coronavirus.

However, Revillas said that “it remains to be seen how the Organization of the Petroleum Exporting Countries (OPEC) would react” to the current COVID-19 situation. ■