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Peso rebounds on China PMI, lower oil prices

BW FILE PHOTO

THE PESO rebounded against the dollar on Wednesday amid better-than-expected China manufacturing data and as oil prices declined.

The local unit ended at P56.145 per dollar on Wednesday, appreciating by eight centavos from its P56.225 close on Tuesday, according to data from the Bankers Association of the Philippines’ website.

The peso opened Wednesday’s session at P56.20 versus the dollar. Its worst showing for the day was at P56.21, while its intraday high was at P56.11 versus the dollar.

Dollars traded declined to $810.71 million on Wednesday from $1.08 billion on Tuesday.

Bank of the Philippine Islands (BPI) Lead Economist Emilio S. Neri, Jr. said the peso joined most Asian currencies that recovered against the dollar on Wednesday.

“Some attribute this to a better-than-expected PMI (purchasing managers’ index) data from China boosting confidence that the rest of the region won’t be dragged by China’s economic slowdown,” Mr. Neri said in a Viber message. 

China’s official manufacturing PMI rose to 49.4 in August from 49.0 in July, the National Bureau of Statistics said on Wednesday. Despite the increase, it remained below the 50-point mark that separates expansion from contraction.

The peso strengthened after the latest decline in global oil prices to among six-month lows, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Oil prices recovered slightly on Wednesday as data pointed to firm US fuel demand following a 5% drop on Tuesday. 

US West Texas Intermediate crude futures jumped 82 cents or 0.9% to $92.46 a barrel at 0659 GMT after sliding $5.37 in the previous session amid recession fears.

Brent crude futures for October, set to expire on Wednesday, climbed 89 cents or 0.9% to $100.20 a barrel, from their $5.78 loss on Tuesday. Meanwhile, the November contract was up 88 cents or 0.9% at $98.72 a barrel.

Mr. Ricafort also attributed the peso’s strength to steady bank lending growth in July.

Loan growth stood at 12% in July, steady from the June pace, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday, as economic activity continued to recover and on healthy demand for credit.

Outstanding loans by big banks, net of reverse repurchase placements with the central bank, rose by 12% year on year to P10.21 trillion in July.

On a month-on-month seasonally adjusted basis, outstanding loans grew by 0.6%.

For Thursday, Mr. Ricafort gave a forecast range of P56.05 to P56.25 per dollar. — K.B. Ta-asan

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