Peso strengthens as oil prices drop

THE PESO gained against the dollar on Thursday as lower global oil prices eased inflation concerns, and as players digested clues on the US central bank’s policy path.

The currency climbed by 5.6 centavos to finish at P61.565 versus the greenback from P61.621 on Wednesday, based on Bankers Association of the Philippines data posted on its website.

The local unit opened Thursday’s session slightly stronger at P61.60 per dollar. It dropped to as low as P61.65 against the greenback, while its intraday best was at P61.53.

Dollars traded went down to $1.266 billion on Thursday from $1.575 billion on Wednesday.

The peso was supported by easing global crude oil prices and less hawkish signals from the US Federal Reserve chair, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The dollar-peso closed lower but traded mostly sideways at a narrow range as players await the release of key US jobs data tonight,” a trader said by phone.

For Friday, the trader sees the peso moving between P61.45 and P61.75 against the dollar, while Mr. Ricafort expects it to range from P61.45 to P61.65.

Oil prices fell for a third consecutive day on Thursday as concerns over supply disruptions eased after Qatar said Iran and the US had made progress in talks over the Strait of Hormuz, Reuters reported.

Brent futures were 66 cents or 0.92% lower at $70.91 a barrel at 0758 GMT, while US West Texas Intermediate crude fell 59 cents or 0.86% to $67.99 a barrel, their lowest level since February 27.

The talks made “positive progress” on matters related to the memorandum that halted the war in June, a Qatar Foreign Ministry spokesperson said in a post on X, though there was no sign the two sides made headway towards a lasting peace.

Meanwhile, the Japanese yen rose sharply against the dollar on Thursday as traders braced for possible intervention from Japanese authorities, who signaled a new approach to bolstering the chronically weak currency.

The yen rally helped knock the dollar down against its peers ahead of key US jobs figures due later in the day, which are expected to show employment growth slowed slightly in June.

The US dollar fell by as much as 0.9% to ¥161.115 and was last trading at ¥161.28, down 0.8%.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.4% to 100.98.

It hit a one-year high of 101.8 last week as strong economic and inflation data caused traders to raise their bets on US Federal Reserve rate hikes.

Thursday’s data is expected to show US employers added 110,000 jobs in June, with the unemployment rate holding steady at 4.3%, according to the median estimate of economists polled by Reuters.

Jobs gains have exceeded expectations for the past three months, bolstering wagers on Fed rate hikes, although a sharp fall in oil prices in the wake of the US-Iran framework peace agreement has reduced some pressure on the central bank.

Federal Reserve Chair Kevin Warsh said on Wednesday that inflation expectations and price risks had eased in recent weeks, while the ADP National Employment Report showed private employment rose less than expected. — Aaron Michael C. Sy with Reuters