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Peso strengthens on positive data

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THE PESO strengthened against the greenback on Friday due to the improvement in the country’s external debt levels as well as the grim outlook for the US economy from a key US Federal Reserve official.

The local unit finished trading at P50.06 a dollar on Friday, rising by 11 centavos from its P50.17 close on Thursday, data from the Bankers Association of the Philippines showed.

It also appreciated by 13.5 centavos from its P50.195 close on June 11.

The peso opened the session at P50.18 versus the dollar. Its weakest was at P50.22 while its strongest was at P50.06 against the greenback.

Dollars traded totalled $809.02 million on Friday, a decrease from the $1.16 billion seen on Thursday.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the stronger peso to latest external debt stock data.

“The peso closed stronger after the latest improvement in the latest external debt data,” Mr. Ricafort said in a text message.

Bangko Sentral ng Pilipinas data released Friday showed the country’s external debt slipped by 2.6% to $81.4 billion as of March from the $83.6 billion as of end-December 2019.

On the other hand, the debt stock rose by $990 million from its standing as of end-March 2019.

The external debt to gross domestic product (GDP) ratio, which is a solvency indicator, improved to 21.4% from 22.2%.

On the other hand, a trader said the peso rose after a statement from a US Federal Reserve official on the slow recovery of the economy.

“The peso appreciated as the dollar weakened after Federal Reserve official Loretta Mester noted the US economy might not recover swiftly as initially expected,” the trader said in an email.

Ms. Mester, president of Cleveland Federal Reserve Bank, said on Thursday the US economy could take two years to get back to pre-pandemic levels, Reuters reported.

She said she expects the US economy could see a 6% contraction in 2020 and unemployment levels could be at around 9% at the end of the year. — L.W.T. Noble with Reuters





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