THE PESO rose as the country’s dollar reserves continued to rise. – BW FILE PHOTO

THE PESO strengthened against the dollar on Monday on the back of data showing a continued increase in the country’s dollar reserves amid the coronavirus pandemic.

The local unit closed at P48.71 versus the dollar yesterday, appreciating by 5.50 centavos from its P48.765 finish on Friday, data from the Bankers Association of the Philippines showed.

Monday’s close was also its strongest in more than three years or since the P48.66-per-dollar finish on Nov. 10, 2016.

The peso started Monday’s session at P48.70 per dollar. Its weakest showing was at P48.72 while its intraday best was at P48.665 against the greenback.

Dollars traded dropped to $423.30 million on Monday from the $599.65 million logged on Friday.

The peso appreciated on the back of preference for the local currency and data from the Bangko Sentral ng Pilipinas (BSP) showing ample gross international reserves (GIR) as of July, a trader said.

“It’s still driven by the weaker dollar and then the central bank announcement that GIR is already at $98 billion. That also creates strong optimism on the peso,” the trader said in a phone call.

The country’s dollar reserves stood at $98 billion at end-July, higher by 15% from the year-ago level and by 4.8% from its May standing. This is already more than the central bank’s $90-billion projection for this year.

At its end-July level, the GIR can cover up to 8.9 months’ worth of imports of goods and payment of services and primary income. It is also equivalent to 7.5 times the short-term external debt of the country based on original maturity and 4.9 times based on residual maturity.

The peso also gained on the back of market expectations that the restriction measures in Metro Manila will be lifted this week, said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.

President Rodrigo R. Duterte was expected to announce on Monday night the fate of Metro Manila and some nearby provinces that were placed under modified enhanced community quarantine until Tuesday.

Mr. Duterte earlier said he cannot extend the lockdown as funds are depleted and people need to work.

For today (Aug. 18), the trader gave a forecast range of P48.70 to P48.90 per dollar while Mr. Ricafort expects the peso to move around the P48.60 to P48.80 levels. — L.W.T. Noble