THE PESO weakened versus the dollar on Monday on safe-haven demand amid escalating worries over a second wave of infections and as the market priced in the impact of the pandemic on remittances.
The local unit ended trading at P50.345 against the dollar, down by 15 centavos from its P50.195 finish on Thursday, according to data from the Bankers Association of the Philippines. Trading was suspended last Friday for Independence Day.
The peso opened Monday’s session at P50.30 per dollar. Its weakest showing was at P50.39 while its strongest was at P50.24 against the greenback.
Dollars traded totaled $791.9 million on Monday, lower than the $874.24 million seen on Thursday.
A trader attributed the peso’s depreciation to market fears of a second wave of coronavirus disease 2019 (COVID-19) infections.
“It’s still safe-haven on the back of fears of second wave likely to come out…,” the trader said in a phone call.
Reuters reported Beijing saw its second successive record new numbers of COVID-19 on Monday, still traced to a wholesale food market which accounts for 80% of Beijing’s farm produce supply. Officials reported 36 new infections for June 14, following the same number tracked a day earlier, and is the highest daily infection rise in the city since late March.
Some states in the US are also seeing a trend of rising patients filling hospital beds due to the virus, including Texas and Arizona.
Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said market sentiment on the local unit was dragged by the release of remittance data.
“The peso exchange closed weaker after the latest decline in the OFW (overseas Filipino workers) remittances data,” Mr. Ricafort said in a text message.
Bangko Sentral ng Pilipinas (BSP) data released last week showed cash remittances dropped by 4.7% to $2.397 billion in March from the $2.514 billion logged a year ago amid the COVID-19 situation.
The BSP now expects remittances to contract by 5% this year from the 2% growth it forecasted in May. The World Bank earlier said it expects a 20% drop in global remittances due to the pandemic.
The trader gave a forecast range of P50.20 to P50.50 per dollar for today while Mr. Ricafort expects the local unit to move between P50.20 to P50.45. — L.W.T. Noble with Reuters