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Peso strengthens on stimulus progress

The peso appreciated slightly against the dollar on Thursday on news that proposed stimulus programs here and in the United States are making progress.

The local unit closed at P48.045 per dollar on Thursday, inching up by 2.1 centavos from Wednesday’s finish of P48.066, data from the Bankers Association of the Philippines showed.

The peso started the session at P48.06 against the greenback. It depreciated to as low as P48.07 and peaked at P48.04 per dollar.

Dollars traded rose to $674.59 million on Thursday from $499.86 million the day prior.

The peso inched up over positive news on developments over proposed stimulus measures in the Philippines as well as in the US, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

“The peso exchange rate has been steady to slightly stronger versus the US dollar on continued progress on the nearly $900-billion US stimulus package and the Federal Reserve pledged to maintain its massive asset purchase program until it sees substantial further progress in employment and inflation; Fed scrapped its previous pledge to keep buying over coming months,” Mr. Ricafort said in a Viber message on Thursday.

Reuters reported that deliberations over a US stimulus program may have advanced after House of Representatives Speaker Nancy Pelosi invited other lawmakers to meet on Tuesday to come up with a deal to be enacted within the week.

Mr. Ricafort said the market also reacted as one of the Philippine government’s recovery measures have been ratified by the Congress and inched closer to enactment.

He was referring to the Financial Institutions Strategic Transfer Act bill that allows banks to offload their bad loans to asset management companies as these are expected to rise amid a prolonged coronavirus pandemic. The bill will have to be signed by President Rodrigo R. Duterte to become a law.

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said via Viber that the peso’s movement was also affected by the higher inflow of remittances from overseas Filipino workers (OFWs).

OFW remittances increased for the second straight month in October, rising by 2.9% to $2.747 billion, central bank data showed.

Mr. Ricafort said the peso may trade within P48-48.10 versus the greenback on Friday while Mr. Asuncion expects it to range from P48.04 to P48.08 per dollar. — B.M. Laforga

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