THE PESO will likely appreciate further this week on increased risk appetite amid expectations that restriction measures in Metro Manila will be lifted to support the economy.

The local unit closed at P48.765 per dollar on Friday, appreciating by 7.50 centavos from its P48.84 finish on Thursday, data from the Bankers Association of the Philippines showed. Week on week, the peso strengthened by 27.6 centavos from its P49.041-per-dollar close on Aug. 7.

The peso rallied last week as investors were looking ahead and factoring in the possible easing of restriction measures, said UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion.

“Expectations of looser quarantine conditions coupled with some commercial flows also encouraged more selling in the dollar-peso spot market,” Mr. Asuncion said in a text message.

Metro Manila and some nearby provinces are under stricter lockdown until Aug. 18. President Rodrigo R. Duterte said last week he is unlikely to extend the modified enhanced community quarantine, saying funds are depleted and people need to go out and work.

Presidential Spokesperson Harry L. Roque, Jr. said on Saturday a general community quarantine will continue to be imposed in some key business areas outside Metro Manila, including Batangas, Quezon, Iloilo City, and Cebu City, among others.

Meanwhile, the fate of the National Capital Region, as well as Bulacan, Laguna, Rizal, and Cavite, will be announced by Mr. Duterte himself this Monday, Mr. Roque added.

The peso’s gain also came after gains in the US stock market which led to risk-on sentiment, said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.

“The peso closed stronger amid continues weakness in the dollar after improved global market risk appetite that sent most US stock markets among 5.5 month highs,” he said in a text message.

For this week, the market will factor in the government’s decision on restriction measures as well as the Monetary Board’s policy-setting review on Thursday, Mr. Ricafort said.

A BusinessWorld poll last week said 11 out of 16 economists predict key policy rates will remain untouched as the Bangko Sentral ng Pilipinas’ (BSP) Monetary Board meets on Aug. 20.

Mr. Diokno last week signaled they do not see enough reasons to adjust rates at the moment, saying the current policy stance could be kept “for the next few quarters” as the central bank’s previous decisions were preemptive.

The Monetary Board’s 50-basis-point cut in its June meeting brought the central bank’s total reductions this year to 175 bps. This brought the reverse repurchase, lending and deposit facilities to 2.25%, 2.75% and 1.75%, respectively.

Meanwhile, Mr. Asuncion said some external developments, including the prospects of a finalized economic stimulus package in the United States, will also impact the peso.

For this week, Mr. Asuncion gave a forecast range of P48.80 to P49.50 per dollar while Mr. Ricafort expects the peso to trade within the P49.60 to P49.00 band. — L.W.T. Noble

RELATED ARTICLESMORE FROM AUTHOR