THE PESO rallied against the greenback on Monday fueled by positive market sentiment due to the affirmation of the country’s credit rating as well as the recovery in the local manufacturing sector.
The local unit finished trading at P50.32 per dollar on Monday, strengthening by 29 centavos from its P50.61 finish on Friday, according to data from the Bankers Association of the Philippines.
The peso opened the session at P50.50 per dollar on Monday. Its weakest was at P50.53 while its intraday best was at P50.315 against the greenback.
Dollars traded rose to $699.75 million on Monday from the $633.93 million on Friday.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the stronger peso came after S&P Global Ratings affirmed its grade for the country on Saturday.
“[This is] a sign of resilience amid some credit rating and outlook downgrades in many countries, a positive signal for the Philippines especially on economic and credit fundamentals,” he said in a text message.
S&P on Friday said it affirmed its “BBB+” long-term credit rating and its “stable” outlook for the Philippines, citing expectations that the country is likely to bounce back from the pandemic by 2021.
Given by S&P in 2019, a “BBB+” rating is only a step away from the country’s coveted “A”-level grade. Meanwhile, a “stable” outlook suggests the rating will likely be maintained over the next six months to two years.
Another factor that boosted market sentiment on Monday was the release of local manufacturing data, Mr. Ricafort added.
“The peso was also stronger after the pickup in Philippine manufacturing gauge for the month of May as lockdowns in some areas already eased,” he said.
The Philippines Manufacturing Purchasing Managers’ Index (PMI) reading rose to 40.1 in May, still a contraction but better than the record low 31.6 seen in April as some regions already eased restrictions on some business activities.
Meanwhile, a trader attributed the peso’s appreciation to some risk-off sentiment on the dollar following unrest in the United States, as well as positive sentiment on the transition to general community quarantine (GCQ).
“The peso appreciated from broad dollar weakness amid the continuing unrest in various US states and local optimism over the transition of Metro Manila and nearby regions to GCQ today,” the trader said in an e-mail.
For today, Mr. Ricafort gave a forecast range of P50.20 to P50.45 per dollar, while the trader sees the peso moving around the P50.20 to P50.40 band. — L.W.T. Noble