Peso strengthens as confidence improves after US stimulus package passes
THE peso strengthened Friday as market sentiment improved following the passage of a substantial US stimulus package as well as policy easing by the Federal Reserve.
The peso closed trading at P51 after having closed at P51.07 Thursday, according to data from the Bankers’ Association of the Philippines.
Week-on-week, the peso retreated by three centavos from its P50.97 close last Friday.
The peso opened at P50.888. Its low was P51.05 and the high P50.83.
Dollar volume was $456.2 million, up from $420.1 million Thursday.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the peso’s appreciation to improved sentiment after the US government revealed its stiumulus plan.
“Market risk appetite (improved) in view of the passage of the $2 trillion US stimulus package and after Federal Reserve Chairman (Jerome J.) Powell reassured that the Fed will never run out of ammunition in infusing liquidity,” Mr. Ricafort said in a text message.
Meanwhile, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said risks remain should the fight against COVID-19 suffer any setbacks.
“The peso slightly strengthened but the volatility is expected to continue amid the struggles against the COVID-19 pandemic,” he said in a text message.
The US Senate on Wednesday approved a $2 trillion stimulus package that will provide aid for unemployed workers and industries affected by the pandemic, according to Reuters.
The program includes $500 billion for hard-hit industries as well as up to $3,000 direct payments to millions of US families.
It set aside about $350 billion for small business loans, $250 billion for expanded unemployment aid and at least $100 billion for the healthcare sector.
Meanwhile, Mr. Powell said Thursday that the Fed will do whatever possible to support a vigorous rebound in the US economy.
“The first order of business will be to get the spread of the virus under control and then resume economic activity,” Mr. Powell said in an interview with NBC. — Luz Wendy T. Noble
