THE PESO continued to strengthen against the greenback on Monday on positive investor sentiment after the central bank’s rate cut last week.
The local unit closed at P49.855 per dollar on Monday, appreciating by 6.5 centavos from the P49.92 close on Friday, data from the Bankers Association of the Philippines showed.
The peso opened the session at P49.92 versus the dollar. Its weakest showing for the day was at P49.95 while its strongest was at P49.81 versus the greenback.
Dollars traded went up to $819.22 million from the $738.2 million on Friday.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the currency was supported by the latest easing move of the Bangko Sentral ng Pilipinas (BSP).
“The peso closed stronger on continuing positive sentiment largely brought about by the surprise cut that also led to some sharp gains in the local government securities,” Mr. Ricafort said in a text message.
The BSP on Thursday cut rates by another 50 basis points (bps), reducing the rates on the BSP’s reverse repurchase, lending and deposit facilities to record lows of 2.25%, 2.75% and 1.75%, respectively.
The central bank has slashed rates by a cumulative 175 bps this year to help cushion the impact of the coronavirus pandemic on the economy.
BSP Governor Benjamin E. Diokno said keeping an accommodative stance will ease borrowing costs and provide liquidity to the financial system amid the crisis.
Meanwhile, a trader attributed the peso’s strength to a weaker dollar after the continued rise in infections in the United States.
“The peso appreciated as growing coronavirus concerns in the US continue to undermine the greenback in the foreign exchange markets,” the trader said in an e-mail.
The US Centers for Disease Control and Prevention reported an increase of 44,703 infection cases on Sunday, bringing the total to more than 2.5 million. Deaths have also risen by 508 to 125,484.
The trader said the peso is likely to rise further today due to month-end dollar transactions.
Mr. Ricafort sees the peso moving at the P49.75 to P50 levels today while the trader expects the currency to play around the P49.80 to P50 band. — L.W.T. Noble with Reuters