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Peso seen moving sideways on budget approval, holiday break

THE PESO is expected to move sideways in the last trading week of 2020 amid the holidays and on expectations that next year’s budget will be signed on Monday.

The local unit closed at P48.07 per dollar on Wednesday, appreciating by 2.5 centavos from its P48.095 close on Tuesday, data from the Bankers Association of the Philippines showed.

Week on week, it rose by 1.5 centavos from its P48.085-a-dollar finish on Friday. Financial markets were closed on Dec. 24 and 25 for the Christmas holidays. Trading sessions will resume on Monday.

The peso will likely move sideways or strengthen further as the markets expect more remittances to come in from overseas Filipino workers (OFWs) in time for the holidays according to Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort.

Cash remittances to the Philippines rose for a second straight month in October, rising by 2.9% to $2.747 billion year on year, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Mr. Ricafort said the markets are also on the lookout for the scheduled signing of next year’s P4.5-trillion budget, and if the validity of the 2020 budget and stimulus measure will be extended.

Presidential Spokesperson Harry L. Roque said last week that President Rodrigo R. Duterte will sign the 2021 budget on Monday in his hometown, Davao City.

Bills extending the validity of this year’s P4.1-trillion budget and Republic Act No. 11494 or the Bayanihan to Recover as One Act (Bayanihan II) also await Mr. Duterte’s signature.

For Ruben Carlo O. Asuncion, chief economist at the UnionBank of the Philippines, Inc., the peso will move sideways with the “wrapping up for the new year.”

“It seems the BSP has drawn the line on the sand and if levels try to breach sub-P48 (per dollar), they intervene,” he said in a text message.

Further reopening of the economy and trend in coronavirus infections will remain as catalysts for the peso, added Mr. Ricafort.

For this week, Mr. Ricafort sees the peso moving within P47.95-48.12 versus the greenback, while Mr. Asuncion expects it ranging from P48.04 to P48.10 per dollar. — Beatrice M. Laforga

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