THE PESO is seen to depreciate versus the dollar this week amid risk-off sentiment in the market due to Brexit uncertainties as well as a possible drop in monthly remittances.

The local unit closed at P48.07 per dollar on Friday, inching down from its Thursday close of P48.065.

Week on week, the peso weakened by three centavos from its P48.04-per-dollar finish on Dec. 11.

The peso declined versus the greenback on Friday following data showing a decline in foreign direct investments (FDI), said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.

Net FDI inflows sank 12.3% from a year earlier to $523 million in September, ending four months of year-on-year growth. It also fell 17% from the $637 million seen in August.

For this week, an expected drop in October remittances could dampen sentiment on the local currency, said UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion.

The Bangko Sentral ng Pilipinas (BSP) is due to release October remittances data this week.

Latest data from the BSP showed cash remittances rose 9.3% year on year to $2.601 billion in September. However, inflows in the first nine months were still 1.4% lower at $21.886 billion from the $22.187 billion seen in the same period last year.

The central bank expects remittances to drop by 2% this year amid the ongoing coronavirus pandemic.

For his part, Mr. Ricafort said investors will look towards the progress of the 2021 budget bill this week.

Dollar-peso trading will also be affected by international developments, including the Brexit progress, he added.

The P4.5-trillion national budget for next year has been ratified by the Congress last week. The enrolled copy is expected to be signed by leaders of both houses before being transmitted to President Rodrigo R. Duterte for enactment.

Meanwhile, UK Prime Minister Boris Johnson and European Union Executive Commission Ursula von der Leyen said on Friday that a “no-deal” Brexit is the most likely outcome, Reuters reported. The UK is under a transition period and is still part of the EU’s single market and customs union at least until Dec. 31.

Mr. Ricafort sees a trading range of P47.90 to P48.15 versus the greenback this week, while Mr. Asuncion expects a narrower band of P47.95 to P48.15 per dollar. — LWTN with Reuters

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