Peso may decline on safe-haven demand
THE PESO may depreciate versus the dollar this week on rising safe-haven demand due to tensions between Russia and Ukraine.
The local unit finished trading at P51.35 per dollar on Friday, two centavos weaker than its P51.33 close on Thursday, based on data from the Bankers Association of the Philippines.
It also dropped by a centavo from its P51.34-to-the-dollar finish on Feb. 11.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort in a Viber message said the peso was weaker due to risk aversion amid the likelihood of a Russian invasion of Ukraine.
The market will monitor any additional signals from the US Federal Reserve on monetary policy tightening to better control inflation, he added.
The lack of local data releases this week could cause the market to follow developments overseas, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail.
He also expects increased demand for safe-haven currencies like the dollar due to geopolitical tensions.
US President Joseph R. Biden has warned that Russian troops could invade Ukraine “in the coming days,” Reuters reported.
Russia’s nuclear forces held drills supervised by Russian President Vladimir Putin on Saturday.
Meanwhile, Fed Chair Jerome H. Powell is set to deliver his monetary policy update to the US Congress on March 2 and 3 as the Fed gears up to start raising rates next month.
For this week, Mr. Ricafort set a forecast range of P51.15 to P51.45 per dollar, while Mr. Asuncion expects the local unit at P51 to P51.5 band. — JPI with Reuters
