THE PESO is expected to strengthen this week as remittances continue to pour in amid uncertainty on the US tax reform law.
The local currency continued to climb versus the dollar to close Friday’s session at P50.14. This is ten centavos higher than the P50.24-per-dollar finish on Thursday. Week on week, the peso also strengthened versus its P50.445 close last Dec. 15.
Financial markets were closed yesterday and will remain shut today for the holidays.
An economist said the peso may continue to ascend in the last trading days of the year amid seasonal remittance inflows from overseas workers.
“The peso is expected to still be stronger as the holiday remittances continue to probably pour in,” Ruben Carlo O. Asuncion, chief economist of UnionBank of the Philippines, said in a text message.
“However, uncertainty remains in the markets with regards to the possible impact of the recently passed US tax reform bill to the overall US economy,” a trader said in an e-mail.
US President Donald J. Trump signed Republicans’ massive $1.5-trillion tax overhaul into law on Friday, cementing the biggest legislative victory of his first year in office, and also approved a short-term spending bill that averts a possible government shutdown.
The tax package, the largest such overhaul since the 1980s, slashes the corporate rate from 35% to 21% and temporarily reduces the tax burden for most individuals as well.
The spending bill extends federal funding through Jan. 19, largely at current levels. It does nothing to resolve broader disputes over immigration, health care and military spending.
Meanwhile, another trader said demand for the dollar may slightly temper the expected rally of the peso.
“[T]here is a demand for dollar. We’ve been getting some demands from the oil companies so it’s a bit volatile, but the direction is still for a stronger peso towards the yearend,” the trader said.
For this week, the traders are expecting the peso to move between P50 and P50.30. — KANV