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THE PESO
yesterday extended a two-day decline prompted by soaring
oil and rice prices, as well as inflationary woes.
The
situation has caused investors to squirrel away their
dollars, increasing overseas demand for the greenback
but not enough remittances to cover the demand, currency
traders said.
The
local currency closed at P42.615 to $1 Thursday, a
little over 17 centavos weaker than the previous day’s
close of P42.44, its lowest level in five months. It
traded at a high of P42.50 and dipped low to P42.675
during the session.
“Risk
aversion is still happening because inflationary
pressure is pronounced. There is also a spike in oil and
rice prices,” senior vice president for financial
markets Marcelo Ayes of Rizal Commercial Banking Corp.
said.
Global
pump prices reached $123 dollars per barrel overnight
while domestic inflation reached 8.3 percent in April
from 6.4 percent in March.
Rice
prices also spiked after
Myanmar,
a key rice-growing region, was hit by a cyclone.
Ayes
said the peso is expected to trade within P42.85 to
P42.90 this month; and possibly range within P42.50 to
P42.60 as remittances in preparation for school expenses
“bring some relief.”
A trader
from another commercial bank said present remittance
volume is not enough to “balance” offshore demand for
dollars as investors pull out from their peso
investments.
The
trader, who requested anonymity, explained that higher
fuel cost translates to higher import prices and will
cause investors to buy more dollars.
“While
there are remittances coming in, it is not enough to
offset the [offshore] demand for dollars,” the trader
added. |
