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Peso weakens on positive US data, import recovery bets

THE PESO depreciated versus the greenback on Thursday as the market anticipates a recovery in imports and preference for the dollar following upbeat US economic data.

The local unit closed at P48.50 per dollar, shedding 12 centavos from its P48.38 finish on Wednesday, data from the Bankers Association of the Philippines showed. This is the peso’s weakest finish in nearly four months or since it closed at P48.40 per dollar on Oct. 22 last year.

The peso started Thursday’s session at P48.35 per dollar. Its weakest was at its close of P48.50 while its strongest showing was at P48.32 versus the greenback.

Dollars traded inched down to $1.385 billion yesterday from $1.387 billion on Wednesday.

The peso weakened versus the dollar for the third straight day as the market weighed government officials’ suggestions of reopening the economy further, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

“[This] would lead to faster pickup in the business/economic activities as well as resulting in increased importation,” Mr. Ricafort said in a text message.

The Metropolitan Manila Development Authority this week said mayors in the National Capital Region are backing proposals to gradually reopen more businesses while ensuring people are safe from the virus.

Acting Socioeconomic Secretary Karl Kendrick T. Chua earlier recommended for the entire country to be under a modified general community quarantine starting March.

Meanwhile, a trader said investors preferred the dollar over the local unit on Thursday on the back of positive US data.

“The peso weakened anew as the dollar’s appeal improved following the release of upbeat US retail sales and industrial production reports,” the trader said in an email.

Data from the US Commerce Department on Wednesday showed retail sales surged by a seasonally adjusted 5.3% last month after decreasing 1.0% in December. This is better than the 1.1% forecast from a Reuters poll.

Meanwhile, the US Federal Reserve said manufacturing production last month was up 1%, further picking up from the 0.9% expansion in December.

For today, Mr. Ricafort gave a forecast range of P48.35 to P48.55 while the trader expects the local unit to move within the P48.45 to P48.65 band. — L.W.T. Noble with Reuters

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