Peso strengthens vs dollar on strong manufacturing data, remittances
THE PESO strengthened versus the greenback on Wednesday amid seasonal remittance flows and strong manufacturing data.
The local unit ended trading at P50.34 per dollar on Wednesday, appreciating by five centavos from its P50.39 close on Monday, based on data from the Bankers Association of the Philippines.
The market was closed on Tuesday in observance of Bonifacio Day.
The peso opened Wednesday’s session stronger at P50.36 per dollar. Its weakest showing was at P50.46, while its intraday best was at P50.32 against the greenback.
Dollars exchanged increased to $1.032 billion on Wednesday from $819.3 million on Monday.
The peso strengthened on the back of the seasonal increase in remittances from overseas Filipino workers as Christmas nears, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Upbeat manufacturing data also helped boost the peso, he added.
The Philippine manufacturing purchasing managers’ index (PMI) was at 51.7 in November from 51 in October, IHS Markit reported on Wednesday. This is its best reading since the 52.2 in March.
A reading above 50 indicates improving conditions for the manufacturing sector versus the previous month, and below the threshold means deterioration.
Meanwhile, a trader in an e-mail said the peso also appreciated as “future prospects for local dollar demand wane due to concerns over the coronavirus disease 2019 (COVID-19) Omicron variant.”
More countries have started to tighten their border controls amid the threat of the new variant, which was first detected in South Africa. The World Health Organization called Omicron a “variant of concern” and warned about its high transmissibility.
For its part, the Philippines has suspended the implementation of its planned two-week reopening to selected foreign tourists from countries that were deemed low risk from the virus due to the new variant. The country has also imposed border restrictions on South African countries and other areas where the variant has already been detected.
Against the backdrop of Omicron uncertainty and rising COVID-19 cases in Europe, the end of crisis-level interest rates in the United States looms even larger following hawkish comments from Federal Reserve Chair Jerome H. Powell overnight, Reuters reported.
The dollar index already logged its biggest monthly rise since June in November on the thinking that inflation could drive rates US higher sooner rather than later.
For Thursday, Mr. Ricafort gave a forecast range of P50.24 to P50.45, while the trader expects the local unit to move within P50.25 to P50.45 per dollar. — L.W.T. Noble with Reuters
