Peso rebounds vs dollar on narrower trade deficit
THE PESO rebounded against the greenback on Wednesday on news of a narrower April trade deficit and the unsustained rally of US stocks.
The local unit finished trading at P49.85 per dollar on Wednesday, appreciating by 10 centavos from its Tuesday close of P49.95, according to data from the Bankers Association of the Philippines.
The peso opened at P50.05 versus the dollar. Its weakest showing for the day was at P50.07 while its strongest was at P49.83 against the greenback.
Dollars traded climbed to $1.12 billion on Wednesday from the $793.71 million seen on Tuesday.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the local unit’s gains to trade data released yesterday.
“The peso closed stronger after the [release of data showing the] narrowest trade deficit in nearly five years,” Mr. Ricafort said in a text message.
Data from the Philippine Statistics Authority showed the country’s trade deficit was at $499.21 million in April, slimmer than the $3.8-billion gap in the same month in 2019. This, as exports dropped 50.8% to $2.78 billion while imports plunged 65.3% to $3.28 billion.
Year to date, the trade balance was at a deficit of $8.03 billion from January to April, smaller than the $14.14-billion shortfall in the comparable 2019 period.
Meanwhile, a trader said the peso’s rebound came due to weaker dollar sentiment after the US stock market failed to sustain its rally.
“The peso was stronger as investors took in the news that Wall Street gains did not push through on Tuesday,” the trader said in a phone call.
The S&P 500 and Dow fell on Tuesday, pausing after recent strong gains as focus shifted to the Federal Reserve, while the Nasdaq ended at an all-time high for a second straight day after briefly rising above the 10,000 mark for the first time, Reuters reported.
The Fed began a two-day meeting. While no major policy announcements are expected when the US central bank wraps up on Wednesday, investors will scrutinize its remarks on the health of the economy, which has been reopening after coronavirus-related closures.
The Nasdaq’s gains came on the back of strong gains in tech-related shares, a day after the index became the first of Wall Street’s major indexes to confirm a new bull market. Apple, up 3.2%, gave the Nasdaq its biggest boost on Tuesday.
The benchmark S&P 500 fell back into negative territory for the year after temporarily erasing those losses on Monday.
The Dow Jones Industrial Average fell 300.14 points or 1.09% to 27,272.3; the S&P 500 lost 25.21 points or 0.78% to 3,207.18 and the Nasdaq Composite added 29.01 points or 0.29% to 9,953.75.
For today, Mr. Ricafort gave a forecast range of P49.75 to P50 versus the dollar while the trader expects the peso to move around the P49.70 to P50.05 band. — L.W.T. Noble with Reuters
