MANILA -- The Philippine peso is forecast to take a breather after members of the Organization of the Petroleum Exporting Countries (Opec) signalled production limit to address low oil prices.
“The local unit may get a reprieve with the dollar on the backfoot given the bounce in crude," Ayala-led Bank of the Philippine Islands (BPI) said in a research note Thursday.
The study cited news reports saying Opec members are considering not just freeze output but cut production by about 700,000 barrels per day.
Opec member-countries, however, have not finalized anything and said decisions will be made in their next meeting in November.
With this news, price of US crude for November delivery rose more than $2 to about $47.05 a barrel at the New York Mercantile Exchange.
US stocks also went up, thus, the flat opening for the Philippine peso Thursday at 48.19.
The local unit traded between 48.15 and 48.26 in the morning session resulting to an average of 48 .21.
It finished Wednesday’s trade at its seven-year low of 48.25 ahead of the Opec meeting in Algeria and the uncertainties on the path of the Federal Reserve rates.
Monetary officials and economic managers alike have attributed the latest weakness of the peso to negative sentiments as a result of external factors.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said the local currency remains strong as shown by its real effective exchange rate (REER), which is the weighted average against a basket of currencies.
He said the peso remains competitive and flexible, adding that its current trading level is still far from the 55-level it registered during the fiscal crisis in 2005. (PNA)