THE PESO weakened further on Tuesday as Congress continued deliberations on the 2021 national budget and amid prolonged talks in the United States on an economic stimulus program amid the coronavirus pandemic.
The local unit closed at P48.535 versus the dollar on Tuesday, decreasing by 6.5 centavos from its P48.47 finish on Monday.
The peso opened Tuesday’s session sharply weaker at P48.57 against the greenback. It climbed to as high as P48.50 during trading, while its weakest showing was at P48.61 versus the dollar.
Dollars traded climbed to $821.60 million on Tuesday from $600.35 million on the previous day.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso weakened as the market waits for developments in Congress deliberations on the 2021 national budget following the resolution of a row over the House speakership.
Another trader said the peso declined amid a delay in the signing of a fresh fiscal stimulus in the US.
The Trump administration on Sunday called on the US Congress to pass a stripped-down coronavirus relief bill as negotiations on a broader package ran into resistance, Reuters reported.
The dollar flirted with three-week lows on Tuesday as investors stuck to hopes that there will be large US fiscal stimulus after the Nov. 3 election to shore up a pandemic-hit economy, supporting riskier currencies.
The dollar index stood at 93.036, just above Friday’s near-three-week low of 92.997. The euro traded at $1.1841, having gained 0.60% on Monday.
While markets are getting sceptical about the chances of having a bipartisan package before the election, a widening lead by Democratic presidential candidate Joe Biden over Mr. Trump is leading investors to expect big stimulus after the election.
A Biden victory is also seen as negative for the dollar partly because his pledge to hike corporate tax would reduce returns from investments in the United States.
Thus the dollar also weakened against currencies that are deemed “safer” — those that tend to have small or inverse relations with risk sentiment — such as the yen and the Swiss franc.
The yen strengthened to 105.34 per dollar while the Swiss franc traded at 0.9102 to the dollar, near its highest in three weeks.
The offshore Chinese yuan nursed losses after China’s central bank removed the reserve requirement ratio for financial institutions when conducting some foreign exchange forwards trading, a move seen as a bid to curb recent yuan appreciation.
The yuan last stood at 6.7626 to the dollar, off Friday’s 1 1/2-year high of 6.6785.
For today, Mr. Ricafort expects the peso to range from P48.45 to P48.60 versus the dollar, while the trader sees it moving from P48.45 to P48.65. — KKTJ with Reuters