THE PESO appreciated against the greenback on Thursday, reflecting gains in the local stock market and better market sentiment amid measures unveiled by the US government to mitigate the impact of the coronavirus disease 2019 (COVID-19).
The local unit ended trading at P51.07 per dollar, stronger by seven centavos from its P51.14 close on Wednesday, according to data from the Bankers Association of the Philippines.
The peso opened the session at P50.98 against the dollar. Its weakest showing for the day was at P51.15, while its intraday best was at P50.90 versus the greenback.
Dollars traded dropped to $420.1 million from $642.6 million on Thursday.
A trader attributed the peso’s strength to better investor sentiment as evidenced by gains in the Philippine Stock Exchange index (PSEi), paired with news that the US Senate approved a $2-trillion stimulus package amid the pandemic.
“Market is still relatively quiet… I think there was some demand seen because of the rebound in the stock index as well as better risk sentiment as the US senate approved their stimulus package,” the trader said in a phone call.
The PSEi went up 373.82 points or by 7.44% to close at P5,401.58 on Thursday, also on the back of positive investor sentiment.
Meanwhile, on Wednesday, the US Senate unanimously passed a $2-trillion bill that will provide aid for unemployed workers and industries affected by the pandemic, according to Reuters.
It will include $500 billion in funding for hard-hit industries as well as up to $3,000 in direct payments to millions of US families.
Likewise, it will allot $350 billion for small business loans, $250 billion for expanded unemployment aid and at least $100 billion for the health care sector.
UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion also attributed the peso’s better finish to recent moves from the US government.
“Recent moves by the [US] Fed[eral Reserve and on the fiscal side may also be helping in the stability of global markets, thus also affecting the domestic markets,” Mr. Asuncion said in a text message.
The US Federal Reserve said on Monday it will buy corporate bonds, backstop direct loans to companies and will also introduce a credit line to small and medium-sized businesses, all to support and stabilize the financial markets.
For today, the trader sees the peso playing around the P50.90 to P51.20 band, while Mr. Asuncion gave a forecast range of P50.80 to P51.10.
The dollar fell against the yen on Thursday before data expected to show a surge in US claims for unemployment benefits as companies lay off workers due to the rapid spread of the coronavirus.
The Australian and New Zealand dollars, both of which are closely linked to the global commodity trade, fell against their US counterpart as traders avoided taking on excessive risk.
The dollar fell 0.2% to 110.98 yen in Asia on Thursday.
US weekly jobless claims due later on Thursday are expected to rise to around a million, which would be well above the previous peak seen during the global financial crisis. — L.W.T. Noble with Reuters