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Peso rises on Bayanihan II progress

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THE peso strengthened on Monday as lawmakers near the approval of the second stimulus fund to mitigate the effects of the coronavirus disease 2019 (COVID-19).

The local unit closed at P48.62 versus the dollar, appreciating by six centavos from P48.68 on Thursday, data from the Bankers Association of the Philippines showed.

The peso started Monday’s session at P48.66 per dollar. It hit a low of P48.69 while its best showing was its closing level.

Dollars traded sank to $481.8 million on Monday from Thursday’s $788.66 million.

An analyst attributed the peso’s climb to the recent committee approval of Bayanihan II which aims to provide up to P165 billion in assistance to those affected by the virus, especially the poor and small businesses.

“The peso closed stronger amid the market optimism over the recent progress on the Bayanihan II bill,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

The Bicameral Conference Committee agreed last Thursday to add the P25-billion standby fund to P140 billion of the Bayanihan II or the Bayanihan to Recover as One Act. They expect the bill to be ratified this week.

Mr. Ricafort added that the peso remained attractive as the Bangko Sentral ng Pilipinas (BSP) decided last week to hold interest rates at current levels amid manageable inflation.

The BSP’s policy-setting Monetary Board kept rates on the overnight reverse repurchase, lending and deposit facilities at their record lows of 2.25%, 2.75% and 1.75%, respectively.

Meanwhile, Mr. Ricafort said the dollar depreciated as US yields continued to sink amid growing COVID-19 cases there.

“Weakness in the dollar was due to near record low in US interest rates and bond yields at close to 0%, reducing the attractiveness of the currency with much lower returns.”

Mr. Ricafort expects the peso to move within the P48.55 to P48.70 per dollar range today. — K.K.T. Jose

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