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Peso set to climb ahead of inflation, trade data

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REUTERS/ELOISA LOPEZ

THE PESO is expected to strengthen this week ahead of the release of local inflation and trade data.

The local unit closed at P48.48 versus the dollar on Friday, depreciating by five centavos from its P48.43 finish on Thursday, data from the Bankers Association of the Philippines showed.

Week on week, the peso was two centavos weaker than its P48.46-per-dollar close on Sept. 25.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso weakened as investors sought a safe haven in the dollar following news that US President Donald J. Trump tested positive for coronavirus disease 2019 (COVID-19).

“The peso was weaker after US President Trump tested positive for COVID-19, weighing on sentiment on the global financial markets, including the peso, and also causing a healthy upward correction in the dollar as a safe haven,” Mr. Ricafort said in a text message.

A trader said investors were also worried about the lack of a decision on a fresh stimulus fund in the United States.

Mr. Ricafort said debates on the stimulus fund may continue to affect the movement of the local currency this week.

US House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin spoke for 65 minutes on Friday, her spokesman wrote in a post on Twitter, continuing their talks over a possible fresh coronavirus aid package.

They discussed areas of disagreement, and negotiations will continue, spokesman Drew Hammill posted on Twitter.

Ms. Pelosi, a Democrat, and Mr. Mnuchin have talked every day this week and met in person on Wednesday in an effort to negotiate a new bipartisan aid package to respond to the economic fallout from a pandemic that has killed more than 207,000 Americans and thrown millions out of work.

Congress and the White House approved more than $3 trillion worth of coronavirus relief measures earlier this year, but Mr. Mnuchin, as well as members of Congress from both parties, have argued more stimulus is needed.

Meanwhile, the trader said the peso may rise against the dollar this week ahead of a speech by US Federal Reserve Chairman Jerome Powell on Tuesday.

Mr. Ricafort said a major catalyst this week will be September inflation data and the August trade report set to be released on Tuesday.

“Upcoming Philippine economic data as a source of new market leads include imports, exports and trade deficit,” he said.

Mr. Ricafort said positive growth in the trade sector is possible as more businesses have reopened amid the looser restrictions due to COVID-19.

For this week, Mr. Ricafort expects the peso to range from P48.40 to P48.65 per dollar while the trader sees it moving within P48.35 to P48.60. — K.K.T. Jose

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