Home Banking & Finance Peso to weaken on rising local coronavirus cases
Peso to weaken on rising local coronavirus cases
THE PESO may depreciate this week due to the continued increase in coronavirus disease 2019 (COVID-19) cases, which could dampen sentiment on the local unit.
The local unit finished trading at P49.33 per dollar last Friday, appreciating by 3.50 centavos from its Thursday close, data from the Bankers Association of the Philippines showed.
It also gained 11 centavos from its P49.44-per-dollar close on July 17.
The peso’s Friday finish was its strongest in more than three years or since the P49.17 close on Nov. 15, 2016, said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.
The currency gained as demand for dollars waned due to the surge in US infections, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said.
“The peso still trended toward strength as the US continues its bout against increasing COVID-19 infections,” Mr. Asuncion said in a text message.
Total cases in the US reached more than four million on Thursday. The US new COVID-19 infection rate is at an average of 2,600 per hour, which is the highest in the world, Reuters reported.
Meanwhile, Mr. Ricafort attributed the peso’s gain to less preference for the dollar after the latest weekly US jobless claims data.
The weekly US jobless claims data released Thursday showed nearly 32 million people receiving unemployment benefits in early July.
For this week, local economic data as well as the continued rise in COVID-19 infections will be major factors that could affect the peso, the analysts said.
“Upcoming major Philippine data releases include BoP (balance of payments) as of June as well as bank loans and M3 growth,” Mr. Ricafort said.
The country’s BoP position stood at a surplus of $2.431 billion in May, wider than the $928 million seen a year ago as well as the $1.666-billion surfeit in April, central bank data showed. It was also the biggest since the $2.704-billion surfeit in January 2019.
The BoP position was at a surplus of $4.02 billion from January to May, thinner than the $5.19-billion surfeit in the same period last year.
Meanwhile, M3 or money supply growth was at 16.6% to P13.7 trillion in May, quicker than the 16.2% pace in April.
However, outstanding loans disbursed by universal and commercial banks rose 11.3% in May, slower than the 12.7% growth pace in April.
For his part, Mr. Asuncion said the peso will likely continue its appreciation, although the recent surge in infections, especially in Metro Manila, may affect sentiment.
Confirmed COVID-19 patients in the country reached 78,412 cases as of Saturday, of which 50,763 are active cases, health officials said.
For this week, Mr. Ricafort expects the peso to move around the P49.20 to P49.45 range versus the dollar while Mr. Asuncion gave a forecast range of P49.20 to P49.40. — LWTN with Reuters