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Peso strengthens to near four-year high

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THE PESO bounced back on Thursday to a near four-year high as news of a vaccine against the coronavirus disease 2019 (COVID-19) and the possible relaxation of lockdown in Metro Manila sparked optimism among investors.

The local currency closed at P48.84 versus the greenback on Thursday, appreciating from the P48.94-a-dollar finish on Wednesday, based on the data from the Bankers Association of the Philippines. 

The peso opened at P48.90 against the greenback. Its weakest showing was at P48.93 while it closed at its intraday best.

The volume of dollars traded slid to $632.1 million on Thursday from the $795.92 million seen on Wednesday.

The local currency’s close is its strongest in almost four years or since Nov. 10, 2016’s P48.66-per-dollar finish, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.

Mr. Ricafort said the peso appreciated as the US dollar continued to decline against other major global currencies after news on COVID-19 vaccine sparked optimism and reduced safe-haven demand.

He said the positive market sentiment, coupled with the US’ plans to roll out new relief measures, will help spur the global economy heavily battered by the pandemic’s fallout.

President Rodrigo R. Duterte has said Russia, which said they developed the first vaccine for COVID-19, committed to deliver this to the Philippines by September or October.

The government has said it will set aside P20 billion to buy vaccines for its free vaccination program that will prioritize poor communities.

Russian President Vladimir Putin said this week the vaccine promises “sustainable immunity” against the highly-infectious disease and assured it has already passed regulatory approvals.

“Markets are also anticipating the latest GIR (gross international reserves) data that could post new record highs amid increase in foreign borrowings by the government and the biggest companies,” Mr. Ricafort added.

Central bank data showed GIR rose by a tenth from a year ago to $93.32 billion as of June.

Meanwhile, a trader attributed the strong peso to growing optimism among investors that lockdown restrictions in the National Capital Region (NCR) and neighboring provinces may be eased next week.

“The peso appreciated further from investor optimism ahead of possible loosening of lockdown measures in NCR and nearby areas by next week,” a trader said via email.

Key economic hubs were placed under stricter lockdown until Tuesday, Aug. 18, to curb the rising number of coronavirus cases in the country and prevent the healthcare system from collapsing.

“The local currency might strengthen on expectations of a weaker US retail sales report tomorrow,” the trader said on Thursday.

On Friday, Mr. Ricafort expects the peso settling between P48.75 and P48.90 versus the dollar, while the trader sees it ranging within P48.80 to P49. — B.M. Laforga





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