THE PESO rebounded against the dollar following consecutive days of weakness as markets priced in better local manufacturing data and the possibility of another rate cut.
The local unit ended trading at P50.63 on Monday, stronger by 34 centavos from its Friday close of P50.97, according to data from the website of the Bankers Association of the Philippines.
The peso opened Monday’s session at P51.02 per dollar. Its weakest showing for the day was at P51.095 while its strongest was at P50.62 against the greenback.
Dollars traded slipped to $1.468 billion yesterday from Friday’s $1.684 billion.
UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion attributed the appreciation of the local unit to “better-than-expected” local data released on Monday.
“The peso’s strength may have relied on the better-than-expected PMI (Purchasing Managers’ Index) reading for February,” he said in a text message.
“Amidst PMI declines of regional neighbors, this may describe robust manufacturing output for Q1 2020,” he added.
IHS Markit Philippines reported that Philippine manufacturing PMI inched up to 52.3 in February from 52.1 in January. A reading of 50 and beyond is considered an expansion.
Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso’s strength came on the back of rate cut expectations.
“Peso exchange closed much stronger amid some market expectations about a possible coordinated rate cuts by the central banks in the US and in other parts of the world as a countermeasure to any adverse effect of the coronavirus…,” Mr. Ricafort said in a text message.
On Monday, Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno said the 25-basis-point (bp) rate cut left from the 50-bp rate cut he earlier signaled for 2020 is still “on the table” and that the Monetary Board will take into account the developments on the coronavirus outbreak during their next policy setting meeting.
“It’s still on the table. And we’re going to meet on Mar. 19 for policy setting. So we’ll see what’s happening that time,” Mr. Diokno said on the sidelines of his book launch in Pasay.
Earlier, Mr. Diokno said they will consider looking into more rate cuts if needed, depending on the progress of the outbreak.
The rate on the BSP’s reverse repurchase, overnight deposit and lending facilities currently stand at 3.75%, 3.25% and 4.25%, respectively.
For today, both Mr. Asuncion and Mr. Ricafort expect the peso to move around the P50.50 to P50.80 levels. — LWTN