Peso strengthens as oil prices stabilize

THE PESO posted gains against the dollar yesterday, reversing a previous slump, as oil prices recovered after failed talks among oil-producing countries drove the commodity lower.

The local unit closed at P46.085 versus the greenback on Tuesday, from its previous finish of P46.15 per dollar.

The peso was traded stronger than the dollar the entire session, opening at P46.15 against the greenback, which was also the local unit’s weakest intraday level. Its strongest point was logged at P46.06 versus the foreign unit yesterday.

Dollars traded increased to $462.9 million from $415.4 million the previous session, data from the Philippine Dealing System showed.

“The peso strengthened slightly due to profit taking amid the stabilization in oil prices,” a trader interviewed by phone said.

“Oil prices rose due to news about a strike in Kuwait, which could potentially limit global oil supply. Exchange rate movements were minimal due to lack of major market-moving news,” the trader added.

Another trader said: “Oil continues to be the driver here. This has been the case for some weeks now.”

“Reported strikes in Kuwait offset worries about major oil producers’ failure to reach a deal on an output freeze,” the trader added.

Reuters reported that oil prices rose on Tuesday as an oil workers strike in Kuwait nearly halved crude production from the country.

For today, a trader said the peso may appreciate slightly due to expectations of weak US data on housing starts and building permits.

This forecast, however, might be reversed if oil prices resume their downward trend.

Traders said the exchange rate may move within the P46 to P46.20 range today.

Regional currencies also rose. South Korea’s won hit a more than five-month high as some analysts said the central bank chief eased views of a rate cut on Thursday, while emerging Asian currencies advanced with a tentative stabilization in oil prices improving risk sentiment.

The won rose as much as 1.3 percent to 1,136.0 per dollar, its strongest since Nov. 5.

Earlier, the Bank of Korea kept interest rates unchanged for a 10th straight month and its governor stressed that the current rate level supports the economy, although a lowered growth forecast kept expectations of a slash alive.