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Peso drops to P48:$1 level as oil prices climb

THE PESO returned to the P48-per-dollar level on Tuesday amid rising oil prices and bargain hunting by investors.

The local unit closed at P48.25 versus the dollar on Tuesday, sinking by 32 centavos from its Monday finish of P47.93 against the greenback, data from the Bankers Association of the Philippines showed.

The peso opened the session at P47.95 per dollar. Its weakest showing was its close of P48.25 while its intraday best was at P47.935 against the greenback.

Dollars traded yesterday decreased to $1.039 billion from the $1.512 billion seen on Monday.

The peso retreated versus the dollar as global oil prices rose, which could increase the country’s import bill, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.

Oil prices rose on Tuesday as a cold front shut wells and refineries in Texas, the biggest crude producing state in the United States, the world’s biggest oil producer, Reuters reported.

Prices also gained as Yemen’s Iran-aligned Houthi group said it struck airports in Saudi Arabia with drones, raising supply concerns in the world’s biggest oil exporter, and on optimism for a global economic recovery amid accelerated COVID-19 vaccine rollouts.

Brent crude was up 14 cents, or 0.2%, at $63.44 a barrel at 0740 GMT, after rising to its highest since January 2020 in the previous session.

US West Texas Intermediate (WTI) crude futures gained 61 cents, or 1%, to $60.08 a barrel. WTI did not settle on Monday because of a US federal holiday. Prices will settle at the close of trading on Tuesday.

The cold weather in the United States halted Texas oil wells and refineries on Monday and forced restrictions on natural gas and crude pipeline operators.

The rare deep freeze prompted the state’s electric power suppliers to impose rotating blackouts, leaving nearly 3 million homes and businesses without power.

Texas produces roughly 4.6 million barrels of oil per day and is home to 31 refineries, the most of any US state, according to Energy Information Administration data, including some of the country’s largest.

In the Middle East, Yemen’s Iran-aligned Houthi group said on Monday it had struck Saudi Arabia’s Abha and Jeddah airports with drones.

The Saudi-led coalition fighting the Houthis in Yemen said early on Monday morning it had intercepted and destroyed an explosive-laden drone fired by the Houthis toward the kingdom.

Meanwhile, a trader said the peso weakened against the greenback on “strong bargain hunting by market participants after closing below the 48 level on Monday.”

The peso’s P47.93-per-dollar close on Monday was the strongest in more than four years or since it finished at P47.83 against the greenback on Sept. 22, 2016.

For today, Mr. Ricafort said the peso will likely move within the P48.15 to P48.30 band versus the dollar while the trader gave a wider forecast range of P48.10 to P48.30. — L.W.T. Noble with Reuters

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