THE PESO weakened versus the dollar on Tuesday as the daily tally of coronavirus disease 2019 (COVID-19) cases increased again and after the government posted a worse-than-expected economic contraction in the third quarter.

The local unit closed at P48.27 versus the dollar on Tuesday, declining by 12.5 centavos from its P48.145 finish against the greenback on Monday, data from the Bankers Association of the Philippines showed.

The peso was weaker during the entire trading day, opening Tuesday’s session at P48.24 against the greenback. It strengthened to as much as P48.20 and closed at its intraday low.

Dollars traded rose to $710.6 million on Tuesday from $679.3 million previously.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso declined against the dollar as the daily tally of COVID-19 cases rose above 2,000 on Monday.

The Health department recorded 2,058 new coronavirus cases on Monday, bringing the total to 398,449.

Meanwhile, a trader said the peso weakened following the release of gross domestic product (GDP) data for the third quarter.

“The peso weakened after the Philippine third-quarter GDP report came weaker than market expectations,” the trader said in an e-mail.

The economy continued to shrink in the third quarter, data released by the Philippine Statistics Authority on Tuesday showed.

Philippine GDP declined by 11.5% in the third quarter, a reversal of the 6.3% expansion recorded in the same quarter last year but easing from the record 16.9% plunge in the previous three-month period.

The third-quarter print was worse than the 9.2% median in a BusinessWorld poll of economists last week.

This brought the year-to-date average to a contraction of 10%. The government expects the economy to shrink by 4.5%-6.6% this year.

For Wednesday, both Mr. Ricafort and the trader sees the peso moving from P48.15 to P48.35 versus the dollar.

Meanwhile, trade-related currencies were buoyed on Monday by a pick up in risk appetite after Joe Biden clinched the US presidency and Pfizer, Inc. said its experimental vaccine was more than 90% effective in preventing COVID-19, Reuters reported. — KKTJ with Reuters