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Peso weakens as new coronavirus cases spike

The peso closed weaker Friday after the Health department reported a larger-than-usual group of new coronavirus infections on the day, about a week removed from the New Year’s celebrations and the accompanying large gatherings.

The peso weakened to P48.088 to the dollar, against its P48.07 finish on Thursday and P48.023 a week earlier, on Dec. 29, the last trading day of 2020, according to data from the Bankers Association of the Philippines.

The peso opened at P48.12, its low for the session. The high was P48.045.

Dollar volume on Friday was $727.37 million, up from $518.45 million Thursday.

In a Viber message, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the peso’s depreciation to the COVID-19 case count and higher oil prices.

The Department of Health reported on Friday 1,776 new coronavirus infections, bringing the total case tally to 483,852. Eight new deaths were recorded and 285 recoveries.

“The peso also weakened… as the seasonal increase in remittances and conversion to pesos during the Christmas and New Year holiday season is over and done with,” he added.

Mr. Ricafort said crude oil prices rising to more than $50 per barrel, possibly leading to a higher oil import bill, increasing demand for dollars to pay for the imports.

“The peso also weakened after the benchmark 10-year US government bond yield reached a new 9.5-month high of 1.08%, sharply up from a low of 0.50% on August 6, 2020, thereby increasing the interest rate returns of dollar-denominated bonds,” he said.

The trader attributed the dollar’s strength to the US non-manufacturing and initial jobless claims reports.

The number of US citizens filing claims for jobless benefits for the first time fell to 787,000 last week from 790,000 the week prior, according to Reuters. The volume of claims was lower than the consensus of 800,000 from economists polled by Reuters. — Beatrice M. Laforga

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