Peso rebounds as governments work to combat COVID-19 impact
THE PESO bounced back on Wednesday after a trading halt on the back of positive market sentiment, with the United States baring fiscal strategies to cushion the impact of the coronavirus disease 2019 (COVID-19) outbreak.
The local unit ended trading at P51.05 per dollar yesterday, recovering 45 centavos from its P51.50-per-dollar finish on Monday, according to the website of the Bankers Association of the Philippines (BAP).
After the trading suspension on Tuesday, the peso opened Wednesday’s session at P51.80 per dollar. Its weakest showing for the day was at P51.85, while its intraday best was at P51.01 against the greenback.
Dollars traded slipped to $712.25 million from the $769.39 million seen on Monday.
In light of the enhanced community quarantine and the curfew set in Metro Manila, the BAP has shortened currency trading hours until further notice, with afternoon trading now ending at 2 p.m. from 4 p.m. previously.
A trader attributed the local unit’s strength to profit taking as well as the dollar’s weakness following remarks from US President Donald J. Trump.
“The peso strengthened today on profit taking from the dollar’s recent strength after local trading was halted on Tuesday,” the trader said in an e-mail on Wednesday.
“Recent statements from US Pres. Trump about a probable US recession has likewise contributed to the weakness of the greenback,” the trader added.
On Monday, Mr. Trump told Americans to clear most of their social activities in the next two weeks and to refrain from mass gatherings, according to a Reuters report.
He also warned that a recession is possible as stocks continued to drop. He added he will focus on addressing the crisis, as the economy will fare better if problems are resolved.
“We’ve made the decision to further toughen the guidelines and blunt the infection now,” Mr. Trump told reporters at the White House.
Meanwhile, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the peso’s rebound was supported by market sentiment on headlines about US stepping up its initiatives to battle COVID-19’s economic impact.
“The peso rebounded from the previous decline as the US government steps up its fiscal rescue plan as COVID-19 continues to spread in advanced economies,” Mr. Asuncion said in a text message.
Reuters reported that Mr. Trump bared a plan to release money for Americans to ease the economic shock from the virus spread.
Meanwhile, US Treasury Secretary Steven Mnuchin said he was discussing plans with congressional leaders to send checks immediately to displaced citizens, whereby Mr. Trump said that some people should get $1,000.
The trader sees the peso moving around the P51 to P51.20 range today, while Mr. Asuncion gave a forecast range of P50.90 to P51.30. — L.W.T. Noble with Reuters
