THE PESO could find support from better market sentiment this week, as governments around the world announced more measures to help cushion the impact of the coronavirus disease 2019 (COVID-19) pandemic.
On Friday, the peso ended trading at P50.97 per dollar, recovering by 13 centavos from the P51.10 finish on Thursday, according to the website of the Bankers Association of the Philippines.
However, it weakened by 33 centavos from its P50.64-per-dollar close on March 13.
UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the peso’s rebound came after governments around the world moved to respond to the pandemic.
“The peso came in stronger as markets were better as an unprecedented stew of fiscal stimulus measures were pledged to be undertaken by governments and central banks worldwide. This is also true on the domestic front,” Mr. Asuncion said in a text message.
Among these moves is the latest rate cut from the Bangko Sentral ng Pilipinas (BSP), according to Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort.
“The latest [50-basis-point (bp)] BSP rate cut supports sentiment on the local economy and financial markets…,” Mr. Ricafort said in a text message.
The latest cut by Monetary Board reduced the overnight reverse repurchase, overnight lending and deposit rates to 3.25%, 3.75%, and 2.75%, respectively.
The move followed the BSP’s decision to reduce key rates by 25 bps in February.
On the fiscal side, the Economic Development Cluster last week announced a P27.1-billion spending package to help sectors affected by the pandemic which has caused Luzon to be placed under enhanced community quarantine. The funds will support the tourism industry, give aid to farmers, and to purchase more testing kits, among others.
BSP Governor Benjamin E. Diokno said on Sunday that falling oil prices will also help prop up the peso.
In an interview with ABS-CBN News Channel or ANC, Mr. Diokno said the peso will benefit from lower oil prices amid a decline in demand because of the virus outbreak.
“It (the peso) is steady, as you can see now. With…oil prices going down…, we’re benefiting from this. I think we’ll be okay,” Mr. Diokno said.
This week, the market will continue to monitor developments on the virus outbreak and how authorities around the world are supporting affected sectors.
“Major stimulus would be any additional stimulus measures by various governments around the world to combat the adverse effects of the coronavirus concerns on the global economy and financial markets,” Mr. Ricafort said.
UnionBank’s Mr. Asuncion said he is positive the local unit will be resilient this week, especially if the market sees more stimulus measures from the government.
“I expect the peso to hold up as long as the market senses the efforts of local institutions in supporting sentiment and the market in general,” he said.
Various business groups have urged Congress to deliver a fiscal response in view of the pandemic.
In a statement, they said the maximum fiscal response should include, among others, an increase in funds for conditional cash transfer recipients and additional support for the Department of Labor and Employment to support workers affected, and an increase in public investment spending just like what Germany will be doing.
Local health officials said that 73 new infections were recorded as of Sunday morning, raising the total to 380. Meanwhile, casualties totaled 25.
COVID-19 has already infected more than 300,000 globally, with over 13,000 deaths, while more than 95,000 have recovered.
For this week, RCBC’s Mr. Ricafort gave a forecast range of P50.70 to P51.20, while UnionBank’s Mr. Asuncion sees the peso moving between P50.70 to P51 against the dollar. — L.W.T. Noble