THE PESO may appreciate versus the dollar this week on expectations of strong remittance data and amid cautious sentiment due to the surge in coronavirus infections.
The local unit closed at P49.865 per dollar on Friday, appreciating by 5.5 centavos from its P49.92 finish on Thursday, based on data from the Bankers Association of the Philippines. However, it shed 2.5 centavos from its P49.84-per-dollar close on Sept. 3.
The peso strengthened from its Thursday finish following the release of data showing higher foreign direct investments (FDIs) in June, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.
Data released by the central bank on Friday showed FDI net inflows climbed 60.4% to $833 million in June from $519 million a year ago. This brought FDI inflows in the first semester to $4.298 billion, higher by 40.7% from the $3.055 billion logged in the same period of 2020.
Inflation data also affected peso-dollar trading last week, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said.
The consumer price index rose 4.9% in August from the 4% in July, the Philippine Statistics Authority reported on Tuesday.
Last month’s inflation print was quicker than the 4.4% median in a BusinessWorld poll and was the fastest in more than two years or since the 5.1% print in December 2018. It also breached the central bank’s 2-4% target.
For this week, Mr. Ricafort said remittance data scheduled to be released by the Bangko Sentral ng Pilipinas (BSP) on Wednesday could affect peso-dollar trading this week.
Cash remittances increased 7% year on year to $2.638 billion in June from $2.465 billion, latest BSP data showed. This was the biggest inflow since the $2.89 billion in December.
For the first semester, remittance inflows rose 6.4% to $14.918 billion from $14.019 billion in the same period of 2020. The BSP expects remittances to grow by 4% this year.
Meanwhile, Mr. Asuncion said negative sentiment due to the surge in coronavirus infections could also affect the peso.
Data from the Department of Health showed infections rose by a new record high of 26,303 on Saturday, bringing the total active cases to 185,706.
For this week, Mr. Ricafort gave a forecast range of P49.65 to P50.10 per dollar, while Mr. Asuncion expects the local unit to move within P49.70 to P50.20. — L.W.T. Noble