Peso falls on fears of global inflation due to Iran oil supply cut

Peso traded 42.665 to the dollar on Tuesday, Feb. 21, 2012. AFP PHOTO

MANILA, Philippines—The peso fell on Tuesday as concerns over the rise in global oil prices, brought about by the decision of Iran to cut supply to France and Britain, elicited concerns over potential global inflationary problems and offset the euphoria resulting from the approval of the second bailout package for debt-ridden Greece.

The local currency closed at 42.665 against the US dollar, down by 9 centavos from the previous day’s finish of 42.575:$1.

Intraday high reached 42.55:$1, while intraday low settled at 42.715:$1. Volume of trade amounted to $1.29 billion from $993 million previously.

Traders said some investors expressed concern over the decision of Iran to cut oil exports to the two European countries amid dispute over Iran’s nuclear program. The report on the oil supply cut pushed oil prices to their highest in nearly nine months, prompting concerns that this could spell more serious inflationary concerns if not immediately addressed.

Meantime, traders also said the approval by European policymakers of a $170-billion bailout package for Greece eased worries of a potential Greek default on its maturing obligations and prevented a destabilizing default by the EU member-country.

Traders said the approval of the rescue fund for Greece pleased foreign fund owners as it indicated the commitment of European policymakers to avoid the eurozone debt crisis from further worsening this year.

Nonetheless, market players said, the latest problem on rising oil prices dampened investor sentiment.