THE PESO will likely move sideways against the dollar this week on the back of a seasonal pickup in remittances as well as uncertainties abroad.
The local unit closed last week at P52.16 versus the greenback, 34 centavos stronger than its P52.50 finish on Thursday.
Week on week, the peso also strengthened from its P52.63-per-dollar close last May 17.
Michael L. Ricafort, Rizal Commercial Banking Corp. economist, said the peso will likely strengthen versus the dollar this week on the back of the “seasonal increase” in cash sent home by overseas Filipino workers to fund tuition payments, which may spill over until June.
He added that the peso will also be supported by the latest decline in the greenback against major global and Asian currencies amid the ongoing trade war between the US and China.
“[T]he intensified US-China trade war…led to lower US benchmark bond yields to a 1.5-year low of 2.32% for 10-year bonds (that reduced the interest rate return/attractiveness of the US dollar),” Mr. Ricafort said in a text message.
However, a market analyst said the greenback is seen to move sideways with an “upward bias” this week due to safe-haven buying amid lingering US-China trade tension, heightened Brexit uncertainties, and potentially mixed Chinese economic data.
The analyst noted that the effectivity of the reserve requirement ratio (RRR) cuts earlier announced by the Bangko Sentral ng Pilipinas “may also strengthen the dollar by tempering expectations of future domestic returns.”
A percentage point cut in big banks’ RRR will likely unleash P90-100 billion into the financial system, while another P22 billion is seen to be released due to a 100-basis-point cut in the reserve ratios of smaller lenders.
For this week, Mr. Ricafort expects the peso to move between P51.90 and P52.20, while the analyst gave a P52.05-P52.65 range. — K.A.N. Vidal