Peso may rise further as government continues COVID-19 vaccine rollout

THE PESO could rise further versus the dollar this week as the government continues its coronavirus disease 2019 (COVID-19) vaccine rollout and as cases in Metro Manila showed a declining trend.
The local unit closed at P47.75 per dollar on Friday, gaining 7.5 centavos from its P47.825 finish on Thursday, based on data from the Bankers Association of the Philippines.
The local unit also strengthened by five centavos from its P47.80-per-dollar close on May 28.
Data showing steady inflation in May boosted the peso on Friday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.
Headline inflation was steady for the third straight month at 4.5% in May, the Philippine Statistics Authority reported on Friday, matching market expectations.
The figure was within the 4-4.8% estimate by the BSP for that month and also matched the median estimate in a BusinessWorld poll.
Year to date, inflation was 4.4%, higher than the 2-4% target of the central bank and its revised forecast of 3.9% for the year. May was the fifth month in a row that inflation went beyond target.
Meanwhile, a trader said the elevated global oil prices also affected peso-dollar trading last week.
For this week, Mr. Ricafort said the market will watch out for the release of April unemployment data on Tuesday, as well as trade data due to come out on Wednesday.
He added that the declining trend in new COVID-19 cases as well as progress in the government’s inoculation program could help drive market sentiment this week.
The Health department reported 6,955 new coronavirus cases on Saturday, which brought the country’s tally to over 1.26 million.
The department Mindanao accounted for 25% of the new cases reported last week.
Meanwhile, the trader said the market could take its cue from the US jobs data released last week, which was weaker than expected.
The dollar fell on Friday after US nonfarm payrolls data showed hiring increased in May as the pandemic eased, but not as much as expected, tempering expectations the Federal Reserve will tighten monetary policy sooner, rather than later, Reuters reported.
Nonfarm payrolls increased by a solid 559,000 jobs last month, helped by higher COVID-19 vaccination rates, but that was below the consensus forecast for 650,000 jobs added in May.
The softer-than-expected report means there is no urgency for the Fed to begin tapering its monthly purchase of $120 billion in bonds to support the economy.
At 3 p.m. ET on Friday, the dollar index was down 0.38% at 90.135, dropping from a three-week high earlier in the session.
The dollar had rallied on Thursday, notching up its biggest daily gain in a month, after weekly US jobless claims fell below 400,000 for the first time since the pandemic started more than a year ago and private payrolls increased by significantly more than expected.
For this week, Mr. Ricafort gave a forecast range of P47.90 to P48 per dollar, while the trader expects the local unit to move within the P47.70 to P48 levels. — IBC with Reuters