THE PESO is expected to bounce back versus the dollar this week as the market anticipates the leadership change in the United States and on developments regarding coronavirus vaccines.
The local unit finished trading at P48.088 versus the dollar on Friday, shedding 1.8 centavos from its P48.07 close on Thursday, data from the Bankers Association of the Philippines showed. It also weakened by 6.5 centavos from its P48.023-per-dollar finish on Dec. 29.
The peso weakened due to risk-off sentiment as local infections continued to increase, Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said in a text message.
Meanwhile, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said peso-dollar trading last week was relatively stable alongside other emerging Asian currencies despite the political uncertainties caused by the commotion in the US Capitol.
For this week, Mr. Asuncion said the peso could benefit from risk-on sentiment following the confirmation of US President-elect Joseph R. Biden and its implications for the country’s fiscal policy amid the crisis.
Mr. Biden sparked market hopes as he hinted that his administration is crafting a stimulus package to be revealed on Thursday that includes unemployment insurance and rent forbearance.
Another factor that could boost appetite for the peso is the development and deployment of various vaccines for COVID-19, RCBC’s Mr. Ricafort said.
This week, Mr. Ricafort expects the peso to move within the P48 to P48.10 band versus the dollar, while Mr. Asuncion gave a wider forecast range of P47.85 to P48.15. — L.W.T. Noble