THE PESO further strengthened on Tuesday following slower inflation for September and hopes of a deal on a stimulus fund in the United States meant to combat the economic impact of the coronavirus disease 2019 (COVID-19).
The local unit closed at P48.38 versus the dollar on Tuesday, rising by 2.5 centavos from its P48.405 finish on Monday.
The peso opened Tuesday’s trading at P48.35 against the greenback. It strengthened to as high as P48.33 during the session. On the other hand, the peso hit an intraday low at P48.42 per dollar.
Dollars traded rose to $658.2 million on Tuesday from $499.3 million on the previous day.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message that the peso strengthened as sentiment improved following the release of data showing slower inflation last month.
Inflation eased for the second straight month in September to its slowest in four months on lower prices of food and non-alcoholic beverages.
Headline inflation stood at 2.3% in September, the slowest since May’s 2.1%, the Philippine Statistics Authority reported yesterday. The September print was down from the 2.4% pace in August but faster compared with the 0.9% print in September 2019.
The latest reading matched the median estimate in a BusinessWorld poll conducted last week and fell within the Bangko Sentral ng Pilipinas’ (BSP) 1.8%-2.6% estimate range for September.
Year to date, inflation has so far averaged 2.5%. This is higher than the BSP’s forecast of 2.3% for the year but still within its 2-4% target.
Meanwhile, a trader said the peso rose on optimism that US lawmakers could agree on new stimulus to ease the economic impact of the coronavirus.
US House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin spoke by phone for about an hour on Monday on coronavirus economic relief and were preparing to talk again on Tuesday, continuing their recent flurry of activity working towards a deal on legislation, Reuters reported.
White House Chief of Staff Mark Meadows said there was still potential for an agreement among lawmakers in Washington on more economic relief, and that US President Donald Trump was committed to getting the deal done.
However, renewed efforts in Congress to reach an agreement on relief funds for the pandemic-hit economy has been complicated by the spread of the coronavirus among key policy makers, including Mr. Trump.
For today, Mr. Ricafort sees the peso moving from P48.30 to P48.45 versus the dollar while the trader expects it to range from P48.30 to P48.50. — with Reuters