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Peso ends flat vs dollar

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THE PESO was flat versus the dollar on Wednesday as the growth of domestic liquidity and bank lending eased in September and amid developments in trials of vaccines for the coronavirus disease 2019 (COVID-19).

The local unit closed at P48.27 versus the dollar on Wednesday, unchanged from its Tuesday finish, data from the Bankers Association of the Philippines showed.

The peso opened Wednesday’s session at P48.35 versus the greenback, which was also its weakest showing. Its intraday best was logged at P48.25 per dollar.

Dollars traded declined to $507.9 million on Wednesday from $710.6 million the previous day.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso closed flat versus the dollar after the release of Bangko Sentral ng Pilipinas data showing slower growth in domestic liquidity and bank lending in September.

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Money supply growth continued to ease in September on slower bank lending, with banks turning cautious in disbursing credit amid the coronavirus pandemic, which has plunged the country into a recession.

M3, which is considered as the broadest measure of liquidity in an economy, grew by 12.3% in September, easing from the downward-revised 13.7% pace logged the previous month, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

Liquidity growth has slowed for four consecutive months since June’s 14.9% pace.

BSP data released separately showed outstanding loans extended by universal and commercial banks grew by 2.8% in September, easing from the 4.7% in August and marking the slowest pace since the 2.4% seen in June 2007.

Inclusive of reverse repurchase agreements, bank lending growth also slowed to 2.9% from the 5.6% logged the previous month.

A trader added that the peso was steady as the market waits for further developments on COVID-19 vaccines.

Pfizer Inc. announced on Monday that its COVID-19 vaccine candidate, developed with BioNTech, showed a 90% success rate in preventing infection during trials, Reuters reported.

However, the dollar nursed losses on Wednesday as optimism about a potential coronavirus vaccine was offset by worries about how the drug will be delivered and by a surge of new infections in the United States.

Initial optimism about coronavirus vaccine testing pushed the dollar up against the safe-harbour yen and the Swiss franc, but this momentum is starting to fade because there are still several obstacles to clear before a vaccine can be distributed.

The dollar held steady at 105.28 yen, trading near a three-week high.

Against the euro, the dollar was little changed at $1.1822.

The dollar index against a basket of six major currencies steadied at 92.741.

The onshore yuan capitalised on the dollar’s weakness and rose to 6.6001.

Other Asian currencies, such as the Korean won and the Singapore dollar, also gained against the greenback.

For today, Mr. Ricafort sees the peso moving from P48.23 to P48.33 versus the dollar, while the trader expects it to range from P48.25 to P48.35. — KKTJ with Reuters

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