THE PESO may strengthen further this week as the inflow of remittances due to the upcoming holiday season support the currency.
The local unit finished trading at P50.80 against the greenback on Friday, appreciating by six centavos from the P50.865-per-dollar close on Thursday, according to data from the Bankers Association of the Philippines.
Week on week, the peso weakened by 15 centavos from its P50.65 per dollar finish on Nov. 15.
Rizal Commercial Banking Corp. chief economist Michael L. Ricafort said the peso was supported by the increase in remittances from overseas Filipino workers (OFWs).
“The peso closed stronger amid some increase in OFW remittances for Christmas-season related spending,” he said in a text message.
A trader also attributed to remittance as one of the factors that helped the peso rally against the dollar.
On Thursday, the Chinese commerce ministry said they will work to finalize a “phase one deal” initial trade agreement with the US, Reuters reported.
Previously, sources including trade experts and those close to the White House have told Reuters that a phase one deal finality could slide into 2020 with Beijing looking for more “extensive tariff rollbacks” while the US countered with new demands for its part.
US national security adviser Robert O’Brien said on Saturday that an initial trade pact with China is still on the cards by 2019, although he warned that Washington will not disregard the continued unrest in Hong Kong.
For this week, Mr. Ricafort and the trader said the local unit’s movement this week will continue to be boosted by OFW remittances, local and international economic data, and the progress of the US-China trade talks.
“[T]he expected seasonal increase in OFW remittances and conversion to pesos for Christmas-related spending could provide some support for peso until December,” Mr. Ricafort said.
“The upcoming budget deficit data next week would be a source of new leads, especially on government spending and infrastructure spending data. On external developments, the major catalyst would be any progress on the US-China negotiations which showed mixed signals recently,” he added.
The trader said the market will monitor data on the manufacturing sector of key economies, as well as the US-China trade talks.
“We will look at data releases of PMI (purchasing managers’ index) from the Europe, UK and US to seek fresh leads… The trade situation is still something [that will affect trading]. Markets will monitor Washington statements as well as tweets from [Mr.] Trump,” the trader added.
Both Mr. Ricafort and the trader see the peso playing around the P50.50-51 level this week. — LWTN with Reuters