CASH REMITTANCES from overseas Filipino workers (OFWs) as well as business process outsourcing (BPO) revenues will support the peso even as the Philippines continues to fight a surge in coronavirus infections, MUFG Global Research said on Wednesday.

“The peso’s resilience despite negative investor sentiments is a reflection of inflows from overseas Filipino remittances and business process outsourcing revenues, and lower demand for imported consumer goods amid tighter mobility restrictions in Metro Manila and surrounding provinces,” MUFG Global Research said in a report.

The peso closed at P48.025 versus the dollar on Wednesday, based on data from the Bankers Association of the Philippines. This was the peso’s strongest finish since Feb. 15 when it ended at P47.93 against the greenback.

“The Philippines is one of three ASEAN+India countries to record new peaks in daily COVID-19 cases in April other than Thailand and India. But the Philippine peso’s gains against the dollar are in stark contrast to the Indian rupee and Thai baht’s performance,” MUFG said.

The Philippines has recorded more than one million COVID infections, with 5,683 new cases tallied on Tuesday. Metro Manila and surrounding provinces Bulacan, Cavite, Laguna, and Rizal are still under modified enhanced community quarantine as the government looks to prevent the further spread of the virus.

Meanwhile, data from Johns Hopkins University showed India has more than 20.6 million cases, with reports citing the country’s struggle in handling patients due to the lack of equipment and facilities. Thailand had more than 72,000 cases as of Wednesday.

The firm said the Indian rupee’s depreciation in April was the largest since the start of the pandemic. MUFG added that while the Thai baht marginally appreciated against the greenback last month, it was the second worst performing currency in Asia excluding Japan.

Cash remittances sent home by OFWs rose by 5.1% to $2.477 billion in February from a year earlier, based on data from the Bangko Sentral ng Pilipinas. The growth rate in February was the quickest since the 9.3% logged in September 2020.

The central bank expects remittances to grow by 4% this year. Last year, inflows fell by 0.8% to $29.903 billion, with more than 647,000 OFWs repatriated due to the pandemic, based on data from the Department of Labor and Employment.

For the second quarter, MUFG expects the peso to move within P46 to P49.75 versus the dollar.

Meanwhile, the firm said the peso could play around the P46.25 to P50 per dollar from July to September and trade between P46.25 to P50.25 in the fourth quarter. — L.W.T. Noble