Peso strengthens to over 2-month high vs dollar

THE PESO surged to an over two-month high on Monday on broad dollar weakness due to the euro’s strength and easing global oil prices.

The local unit closed at P57.808 per dollar on Monday, strengthening by 13.2 centavos from its P57.94 finish on Friday, Bankers Association of the Philippines data showed.

This was the peso’s strongest finish since its P57.735-per-dollar close on Dec. 6, 2024.

The peso opened Monday’s session stronger at P57.90 against the dollar. Its strongest was at P57.77, while its worst showing was at P57.95.

Dollars exchanged went down to $1.17 billion on Monday from $1.33 billion on Friday.

“The US dollar was dragged by the appreciation of the euro-dollar currency pair as a result of the election in Germany,” a trader said in a phone interview.

The dollar was generally weaker on Monday as global crude oil prices slipped, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort added in a Viber message.

For Tuesday, the trader expects the peso to move between P57.70 and P58.10 per dollar, while Mr. Ricafort said it could range from P57.70 to P57.90.

The euro marched higher on Monday after Germany’s opposition conservatives won the national election as expected, while the dollar tumbled to its weakest in more than two months on mounting worries over the growth outlook of the US economy, Reuters reported.

Friedrich Merz was set to become Germany’s next chancellor after his party emerged victorious in Sunday’s election, though he faces complex and lengthy coalition negotiations after the far-right Alternative for Germany surged to a historic second place in a fractured vote.

The euro extended gains from early in the session to touch a one-month high of $1.0528 and last traded 0.5% firmer at $1.0512.

In the broader market, the dollar slid ahead of a busy week packed with US economic data and speeches from various Federal Reserve officials.

Trading was thin on Monday with Japanese markets closed for a public holiday.

Sterling pushed to a two-month top of $1.2690 due to the weaker greenback, while the yen similarly peaked at 148.85 per dollar, its strongest level since early December.

Against a basket of currencies, the dollar fell to a more than two-month low of 106.12.

The greenback has slid more than 3% from its January peak as traders reasoned the start of US President Donald J. Trump’s second term has been mostly bluster on tariffs, leaving little appetite for them to load up on fresh dollar holdings.

Also adding to headwinds for the dollar were falling US Treasury yields on heightened bets of more Fed cuts this year, amid growing concerns over the outlook for the world’s largest economy.

Later this week, investors will get the second estimate of fourth quarter growth figures in the US and January’s core personal consumption expenditures price index data.

Meanwhile, oil prices extended last week’s losses on Monday as investors awaited clarity on talks to end the war in Ukraine and weighed up the prospect of a resumption in crude exports from northern Iraq, Reuters reported.

Brent futures were down 14 cents or 0.2% at $74.29 barrel by 0843 GMT, while US West Texas Intermediate (WTI) crude futures lost 21 cents or 0.3% to $70.19.

Both Brent and WTI dropped by more than $2 on Friday, registering weekly declines of 0.4% and 0.5% respectively.

All eyes remain on efforts to end Russia’s war on Ukraine, which enters its fourth year on Monday. Officials said on Sunday that European Union leaders will meet for an extraordinary summit on March 6 to discuss additional support for Ukraine and European security guarantees. — A.M.C. Sy with Reuters