THE PESO continued to strengthen versus the greenback on Wednesday on news of a $1-trillion stimulus in the US as well as a possible treatment for critical coronavirus patients.
The local unit finished trading at P50.03 per dollar on Wednesday, appreciating by four centavos from its P50.07 close on Tuesday, data from the Bankers Association of the Philippines showed.
The peso opened the session at P50.13 per dollar. Its weakest was at P50.20 while its intraday best was at P49.95 against the greenback.
Dollars traded fell to $768.5 million on Wednesday from the $901.5 million logged on Tuesday.
A trader attributed the peso’s strength to news of stimulus in the US and a pioneer treatment for critical coronavirus disease 2019 (COVID-19) patients.
“The peso strengthened amid prospects of a $1-trillion infrastructure stimulus package and a coronavirus steroidal treatment from the UK,” the trader said in an e-mail.
The $1-trillion infrastructure package eyed by the US government will focus on transportation projects to bring the economy back to life, Reuters reported on Tuesday.
A prior version of a stimulus in the US Department of Transportation allocates most funds to roads and bridges and has also set aside about a quarter to technology infrastructures including 5G wireless and rural broadband, the source with knowledge on the matter said.
Meanwhile, in the UK, a cheap and widely used steroid called dexamethasone showed positive signs of being able to save lives of critically ill COVID-19 patients. Trial results revealed Tuesday showed the steroid reduced death rates by around a third among most severely ill patients admitted to the hospitals.
A second trader said the weaker dollar caused the peso to appreciate on Wednesday.
“As markets turned more on a risk-on, the dollars were sold. As they unwind, the dollar weakened in the global markets,” the trader said by phone.
On Tuesday, global stocks rallied after the announcement of the US Federal Reserve’s additional support.
Japan’s Nikkei jumped by nearly five percent, giving Asia its best day since late March and more than 2% gains in London, Paris and Frankfurt had Europe’s bulls up and running.
The first trader expects the peso to move between P50.00 to P50.20 versus the dollar while the second trader sees it playing around the P50.00 to P50.30 band. — L.W.T. Noble with Reuters