Peso seen to climb further on increase in remittances

THE PESO will likely strengthen against the dollar this week driven by the seasonal increase in remittances in time for the Holy Week break.

The local unit ended Friday’s trading at P51.765 per greenback, seven centavos stronger than the P51.835 finish the previous session, driven by increased market appetite on the back of Chinese trade data which came out better than expected.

This was the peso’s best showing in more than a month or since it closed at P51.72 versus the US currency on March 4.

Michael L. Ricafort, economist at Rizal Commercial Banking Corp., said the peso may strengthen against the dollar this week due to a seasonal increase in remittances from overseas Filipino workers (OFW).

“OFW remittances and conversion to pesos [increase] to finance holiday-related spending for the Holy Week, some tax payments before the April 15 deadline and the upcoming tuition payments,” Mr. Ricafort said in a text message.

Local financial markets will be closed on Thursday and Friday for the Holy Week break.

“Continuous net foreign buying in the local markets amid easing inflation trend and lower local interest rates amid likely monetary easing soon may also support the peso in the coming week/s,” Mr. Ricafort added.

Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno said Friday that a cut in interest rates will “be on agenda” at its third policy review for this year, which happens next month.

Policy rates are now at 4.35% for overnight deposit, a decade-high 4.75% for overnight reverse repurchase and 5.25% for overnight lending after a total of 175-basis-point increase last year.

The central bank chief also hinted on a reduction in big banks’ reserve requirement ratio, which is currently at 18%.

“It’s a question of timing which will be first, the rates cut or the cut in the reserve ratio,” Mr. Diokno said in a Bloomberg Television interview in Washington D.C. on the sidelines of spring meetings of the World Bank and the International Monetary Fund.

For this week, Mr. Ricafort expects the peso to trade between P51.40 and P51.80 versus the dollar, while a foreign exchange trader gave a wider P51.50-P52.10 range. — KANV