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Peso sinks as OPEC+ calls off output talks

THE PESO extended its losing streak versus the dollar on Wednesday amid a deadlock in oil output talks and growing concerns over new variants of the coronavirus disease 2019 (COVID-19).

The local unit closed at P49.79 per dollar on Wednesday, down by 29 centavos from its P49.50 finish in Tuesday, data from the Bankers Association of the Philippines showed.

This was the peso’s weakest close since its P49.82 finish on July 1, 2020, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

The peso opened Wednesday’s session at P49.70 per dollar, which was also its intraday best. Meanwhile, its weakest showing was at P49.91 against the greenback.

Dollars traded decreased to $937.90 million on Wednesday from $1.068 billion on Tuesday.

A trader attributed the peso’s weakness to the failure of the world’s largest oil exporters to reach a deal on output quotas.

“The peso weakened anew from safe-haven demand amid the lingering uncertainty in ongoing discussions among OPEC nations,” the trader said in an email.

Ministers of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) called off oil output talks on Monday after clashing last week when the United Arab Emirates rejected a proposed eight-month extension to output curbs, meaning no deal to boost production has been agreed, Reuters reported.

The White House on Tuesday said they will be closely monitoring discussions among OPEC+ key players, noting they were “encouraged after conversations with officials in Saudi Arabia and the United Arab Emirates”.

Meanwhile, Mr. Ricafort said the peso weakened due to concerns over the more infectious Delta variant of COVID-19, which has resulted in the reimposition of strict lockdowns in some countries.

For Thursday, Mr. Ricafort gave a forecast range of P49.65 to P49.90 per dollar, while the trader expects the local unit to move between P49.70 to P49.90. — LWTN with Reuters

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