Peso climbs on efforts to contain Wuhan virus

Font Size

THE PESO continued to climb on Tuesday as markets heeded positive signals from China’s central bank, which said it will lend support to the economy amid worries on the coronavirus outbreak.

The local unit ended trading at P50.765 versus the greenback yesterday, appreciating by 3.50 centavos from its Monday close of P50.80 per dollar on Monday.

The peso opened at P50.85 against the greenback, which was also its weakest showing for the day. Meanwhile, its intraday best was at P50.725 versus the dollar.

Dollars traded declined to $953.9 million from $1.073 billion on Monday.

Analysts said the peso gained on Tuesday amid news that China has been making efforts to contain the Wuhan novel coronavirus.

“The peso exchange rate closed among the strongest in nearly three weeks…amid extraordinary efforts by China to contain the novel coronavirus, including infusion of liquidity into the markets since markets reopened yesterday (Monday), somewhat sending positive signals to the market,” Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said in a text message on Tuesday.

“The peso took its cue from the halt of the colossal sell-off in Chinese equities. Investors, for sure, are still gauging China’s efforts to stop the spread of the coronavirus that has been feeding the uncertainty,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a separate text message.

China’s central bank said on Tuesday that its huge liquidity injections through open market operations this week showed its determination to stabilize financial market expectations and restore market confidence, Reuters reported.

The remarks were published on the official WeChat account of the People’s Bank of China (PBoC) after it injected a total of 1.7 trillion yuan ($242.74 billion) via reverse repos on Monday and Tuesday.

The central bank said the larger-than-expected liquidity injection should push money market and bond yields down, and reduce financing costs and ease financial pressure on small, micro businesses.

On Tuesday, Hong Kong reported its first death from the newly identified coronavirus on Tuesday, the second fatality outside mainland China from an outbreak that has killed over 420 people, spread around the world and raised fears for global economic growth.

The Hong Kong fatality brought the total death toll from the virus to 427, including a man who died in the Philippines last week after visiting Wuhan. Chinese authorities said the toll in China rose by a record 64 from the previous day to 425, mostly in Hubei province of which Wuhan is the capital.

The total number of infections in China rose by 3,235 to 20,438, and there were at least 151 cases in 23 other countries and regions.

For today, RCBC’s Mr. Ricafort said the peso may trade at around P50.65-50.90 versus the dollar, while UnionBank’s Mr. Asuncion sees the local unit moving within the P50.50-P50.80 range. — L.W.T. Noble with Reuters