THE peso weakened versus the dollar on Thursday as the country logged its worst recession on record.

The local unit closed at P48.11 per dollar on Thursday, shedding 3.5 centavos from its P48.075 finish on Wednesday, data from the Bankers Association of the Philippines showed.

The peso opened Thursday’s session lower at P48.115 per dollar. Its intraday low was at P48.145, while its best showing for the session was at P48.097 against the greenback.

Dollars exchanged increased to $1.188 billion on Thursday from $1.123 billion on Wednesday.

The record gross domestic product (GDP) contraction last year caused the peso to decline versus the dollar, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said. 

GDP shrank 8.3% in the fourth quarter to bring the full-year contraction to 9.5%, the Philippine Statistics Authority reported yesterday. The 2020 figure matched the worse end of the government’s -8.5 to -9.5% estimate and was a turnaround from the six percent GDP growth logged in 2019.

Meanwhile, a trader said the peso depreciated following dovish hints from the US Federal Reserve.

The Fed on Wednesday kept benchmark rates near zero and made no change to its monthly bond purchases, Reuters reported.

Fed Chairman Jerome Powell said their efforts to support the economy until Americans in sectors that have lost jobs come back to the workforce.

“The risks are in the near term, frankly,” amid the new strain of the virus, Mr. Powell said. “There is good evidence to support a stronger economy in the second half of this year.”

For today, Mr. Ricafort gave a forecast range of P48.09 to P48.14 per dollar while the trader sees the peso moving within the P48.05 to P48.25 band. – L.W.T. Noble with Reuters