THE PESO may continue to depreciate on Monday as investors continue to have risk-off sentiment due to more cases of the coronavirus disease 2019 (COVID-19) recorded outside China.

The local unit finished trading at P50.94, shedding 36 centavos from its Thursday finish of P50.58 against the dollar.

Week on week, it also depreciated by 38 centavos from its P50.56 close on Feb. 14.

Analysts blamed market fears due to more cases of COVID-19 recorded outside mainland China as well as some weak local data for the weaker peso.

“Aside from the peso’s response to COVID-19’s increasing spread outside of China, weakness also came from the January 2020 BoP (balance of payments) deficit,” he said in a text message.

On Friday, Reuters reported that South Korea’s confirmed cases grew by 52 to 156, with 111 cases logged in Daegu.

The virus was traced to be from a 61-year-old woman who attended services at the Shincheonji Church of Jesus the Temple of Tabernacle of the Testimony. More than 400 members of the said church have been showing symptoms of COVID-19 although tests are still in the works, according to officials.

At home, data from the Bangko Sentral ng Pilipinas (BSP) late Wednesday showed the country’s BoP swung to a $1.355-billion deficit in January, reversing the $2.704-billion surplus in the same month of 2019.

This latest BoP figure ended six months of surplus due mainly to foreign loan payments at the start of the year.

According to Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort, the peso followed the trend of other currencies which weakened on risk-off sentiment due to more cases of COVID-19.

“Peso was weaker after the stronger US dollar vs. most Asian currencies and other major global currencies amid increased global risk aversion amid concerns that the COVID-19 could spread in other countries outside China and could lead to slower global economic growth,” he said in a Facebook message.

Mr. Ricafort also attributed the local unit’s weakness to the BoP data as well as the latest hot money flows.

BSP data showed that foreign portfolio investments which has also been called “hot money,” saw a net outflow of $486.1 million in January, reversing the $762.82-million net inflow in the same month of 2019 and bigger than the $320-million net outflow in December.

Analysts said the weak hot money data in January came as investors went for safer havens due to geopolitical uncertainties, the COVID-19 outbreak, and regulatory risk in the local market.

For this week, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said a “main driver of the peso may be the release of the budget balance on Tuesday, Feb. 25.”

For his part, RCBC’s Mr. Ricafort said that “developments related to the COVID-19” would still be the major catalyst for the financial markets, especially concerns that it could spread outside China and some adverse effects on the global economy and on some of global companies that experience disruption”.

Reuters reported that while there was a sharp decrease in deaths and new cases of COVID-19 infections in China, additional patients have been recorded in other countries, adding unease about its rapid spread and global reach.

On Saturday, the director general of the World Health Organization (WHO) said that they are concerned about the new cases with no clear epidemiological link. WHO noted that there have been more than 1,200 cases in 26 countries outside China, with even one confirmed case in Egypt, signaling that the virus has reached the African continent.

In Iran, 10 new cases have been confirmed, bringing the total cases to 28 while casualties reached five, according to their health ministry.

For today, UnionBank’s Mr. Asuncion sees the peso playing around the P50.70 to P51 band while RCBC’s Mr. Ricafort gave a forecast range of P50.75-P51.05. — L.W.T. Noble with Reuters

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