THE PESO rebounded against the dollar on the last trading day of 2022 ahead of another long weekend, which could lead to increased spending.
The local currency closed at P55.755 versus the greenback on Thursday, up by 44.50 centavos from Wednesday’s P56.20 close, data from the Bankers Association of the Philippines showed.
The peso opened Thursday’s trading session at P56.17 per dollar. Its weakest showing was at P56.18, while its intraday best was at P55.67 against the greenback.
Dollars traded dropped to $807.8 million from $882.85 million on Wednesday.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the peso appreciated on Thursday from the previous session ahead of the long weekend, which could lead to another round of increased holiday spending.
“The long Christmas holiday weekend and the following long New Year holiday weekend may still lead to accelerated holiday-related spending, though by a lesser extent shortly before the New Year celebrations,” Mr. Ricafort said.
He added that the peso strengthened on the back of a dip in global crude oil prices as coronavirus disease 2019 (COVID-19) cases surge in China, the world’s largest oil importer.
Reuters reported that oil prices dipped on Thursday as surging COVID-19 cases in China dimmed hopes of a recovery in fuel demand for the world’s largest crude oil importer.
Brent crude futures fell 79 cents or 1.0% to $82.47 a barrel by 0730 GMT, while US crude fell 80 cents or 1.0% to $78.16 a barrel.
The scale of the latest outbreak and doubts over official data prompted some countries to enact new travel restrictions on Chinese visitors, even as China dropped travel restrictions on Wednesday.
However, for 2022, the peso depreciated by P4.755 or 8.53% from its P51-per-dollar close on Dec. 31, 2021.
The peso saw a volatile trading year as global central banks began unwinding their pandemic-driven easy monetary policy due to growing inflation risks.
It recorded a fresh record low of P59 against the dollar this year on Oct. 3, down 13.56% from its 2021 close, due to hawkish statements from the US Federal Reserve chief. The local unit finished at this record low again on Oct. 10, 13, and 17.
Still, the peso began its gradual recovery later that month as the Bangko Sentral ng Pilipinas (BSP) likewise became hawkish, even matching the Fed’s policy moves as it sought to support the currency.
The BSP has raised benchmark interest rates by 350 basis points (bps) since May in its fight against rising inflation.
Meanwhile, the Fed has raised borrowing costs by 425 bps since March.
Both are expected to continue tightening next year as inflation remains elevated amid supply constraints.
For next week, Mr. Ricafort sees the peso moving within P55.55 to P56.05 per dollar. For Tuesday, the local unit could trade between P55.65 and P55.95 to start 2023, he said. — AMCS with Reuters