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Peso weakens as US Senate sets vote on stimulus

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THE PESO weakened further on Wednesday as the market waits for the House’s approval of the 2021 national budget and after lawmakers in the United States rejected a proposal for a fresh stimulus fund amid the coronavirus pandemic.

The local unit closed at P48.65 versus the dollar on Wednesday, decreasing by 11.5 centavos from its P48.535 finish on Tuesday.

The peso opened Wednesday’s session at P48.67 against the greenback. It climbed to as high as P48.565 while its weakest showing was at P48.69 per dollar.

Dollars traded declined to $715.61 million on Wednesday from $821.60 million on the previous day.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso declined further as the House of Representatives continues its deliberations on the 2021 national budget.

“Peso has been weaker recently as the markets await further progress on the deliberations and approval of the P4.5 trillion national budget for 2021, in view of the special sessions by Congress from Oct. 13-16,” Mr. Ricafort said in a text message.

Meanwhile, a trader said in an e-mail that the peso dropped after lawmakers from the Democratic Party and House Speaker Nancy Pelosi refused on Tuesday to support the $1.8-trillion stimulus from the White House.

Senate Majority Leader Mitch McConnell said on Tuesday the Republican-led US Senate would vote next week on a targeted, $500-billion coronavirus economic aid bill of the type Democrats already have rejected as they hold out for trillions in relief, Reuters reported.

With negotiations on a broader package stalled and Election Day approaching, both Republicans and Democrats faced pressure to take action to help Americans weather a pandemic that has killed more than 214,000 people and damaged the US economy.

Congress passed $3 trillion in coronavirus aid, including help for the unemployed, in the spring.

Both sides say more aid is needed now, but appear to remain far apart. With leaders of the Democratic-run House and Republican Senate still sparring, a bipartisan deal on coronavirus relief remains unlikely before Nov. 3 presidential and congressional elections.

For today, Mr. Ricafort expects the peso to range from P48.55 to P48.75 versus the dollar while the trader sees it moving from P48.50 to P48.70. — K.K.T. Jose with Reuters

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