THE PESO strengthened further on Tuesday on improved market sentiment following the release of latest data on trade and remittances.
The local unit closed at P48.50 versus the dollar on Tuesday, gaining 12 centavos from its P48.62-per-dollar finish on Monday, data from the Bankers Association of the Philippines showed.
The peso opened Tuesday’s session at P48.52 against the greenback, which was also its worst showing for the day. It traded within a very narrow range, with its closing level of P48.50 also logged as its intraday best.
Dollars traded climbed to $674.6 million from Monday’s $481.8 million.
The peso continued to appreciate as lawmakers ratified the Bayanihan II bill which seeks to provide a P165-billion fund to boost the economy amid the fallout from the coronavirus disease 2019 (COVID-19) pandemic.
Along with the stimulus measure, BDO Unibank, Inc. Chief Market Strategist and economist Jonathan L. Ravelas said sentiment on the peso has improved following the release of positive data on trade and remittances.
“The narrowed trade deficit means foreigners want more peso and less dollars. That’s good as the higher demand for the peso results in appreciation,” Mr. Ravelas said in a phone interview.
“The remittances have also recovered in June which has encouraged even more demand for peso in exchange for cheaper imports to be bought,” he added.
On the other hand, appetite for dollars remains weak as the virus continues to spread in the United States, he said.
Earlier this month, the Philippine Statistics Authority reported that the country’s trade deficit stood at $1.3 billion in June, narrower than the $2.64-billion gap a year ago. This, as exports dropped 13.3% to $5.33 billion while imports declined 24.5% to $6.63 billion.
Meanwhile, cash remittances coursed through banks rose 7.7% to $2.465 billion in June, its fastest growth rate in five months and snapping three consecutive months of contraction due to the pandemic, data from the Bangko Sentral ng Pilipinas (BSP) released earlier this month showed.
Year to date, remittances declined by 4.2% to $14.019 billion. The BSP expects cash remittances to drop by 5% this year due to the COVID-19 pandemic.
The dollar slipped on Tuesday and Asia’s trade-exposed currencies rose after the United States and China both hailed a phone call between their top trade officials as a success, Reuters reported.
Sentiment, and support for riskier currencies over the dollar, was also boosted by a Financial Times report which said that US authorities were considering fast-tracking approval for a COVID-19 vaccine being developed by AstraZeneca and Oxford University.
The safe-haven yen was steady at 105.95 per dollar.
Elsewhere, the trade-sensitive South Korean won rose with the mood, while the Indian rupee picked up where it left off after surging 1% on Monday as the central bank unexpectedly broke with a recent pattern of dollar buying. — with Reuters