THE PESO weakened on Friday as the market opted for safe haven assets after the announcement of the extension of the lockdown to contain the spread of coronavirus disease 2019 (COVID-19).

The local unit closed at P50.80 versus the dollar on Friday, depreciating by four centavos from its P50.76 finish on Thursday, according to data from the Bankers Association of the Philippines.

On the other hand, the local currency strengthened by 10 centavos from its P50.90 close last week.

The peso started the session at P50.68 per dollar. Its weakest showing was at P50.85, while its intraday best was at P50.68 versus the greenback.

Dollars traded climbed to $391.68 million on Friday from the $290 million seen on Thursday.

The extension of the lockdown in the capital as well as in some hot spots triggered risk-off sentiment, according to a trader.

“The peso depreciated from safe-haven demand after the enhanced community quarantine (ECQ) was officially extended further until May 15,” the trader said in an email.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort also attributed the weakness in the local unit to the said announcement from Malacañang.

“The peso exchange rate closed weaker after the two-week extension of the lockdown in Metro Manila and other high-risk areas which could further reduce economic activities,” Mr. Ricafort said in a text message.

On Friday, Presidential Spokesperson Harry L. Roque announced the interagency task force’s recommendation for another two-week extension of the ECQ was approved by President Rodrigo R. Duterte.

The extended lockdown will be observed in Metro Manila, Central Luzon, Calabarzon, as well as other provinces to prevent the further spread of the virus.

Some areas in Visayas and Mindanao will also be assessed to see if they need to be locked down as well.

Aside from the lockdown, Mr. Ricafort said the peso also weakened after a slight correction in global oil prices.

Reuters reported that oil prices inched up on Friday after producers including Kuwait decided to cut output and as the United States approved a fiscal package to cope with the pandemic.

Brent crude rose by 24 centavos or 1.1% to $21.57 by 0622 GMT following the uptick of more than $1 earlier and the 5% rise seen on Thursday. US oil also inched up by 38 centavos or 2.3% to $16.88 per barrel, following the 20% surge in the previous session. — LWTN with Reuters

RELATED ARTICLESMORE FROM AUTHOR