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Economy

Peso sinks to six-month low

THE PESO retreated against the greenback on Monday to log its weakest close in six months amid market expectations of a recovery in imports amid vaccine procurement developments.

The local unit ended at P48.70 a dollar on Monday, shedding 24.9 centavos from its P48.451 finish on Friday, data from the Bankers Association of the Philippines. This is also its weakest close since its P48.71 finish on Aug. 17.

The peso opened the session at P48.44 versus the dollar. Its weakest level was its close of P48.70 while its strongest showing was at P48.43 against the greenback.

Dollars traded climbed to $1.288 billion on Monday from $726.62 million on Friday.

The peso’s weakness reflects the market’s anticipation of a rebound in imports, which could affect the currency, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

“Emergency use authorization on Sinovac already approved by local FDA (Food and Drug Administration) as well as the arrival of more COVID-19 doses could help recovery prospects for the overall economy as well as on imports,” Mr. Ricafort said in a text message.

Meanwhile, a trader attributed the peso’s weakness to preference for the dollar amid hopes for a stimulus in the world’s largest economy.

“The peso weakened significantly after US Senate Majority Leader [Chuck] Schumer hinted that the $1.9-trillion stimulus package is on track for endorsement to the White House by March 14,” the trader said in an email.

Mr. Schumer, a Democrat, said on Friday that they will welcome “constructive amendments” by Republican colleagues, but stressed their chamber will pass the bill before March 14, which is the expiry date of the latest round of federal unemployment benefits.

For today, Mr. Ricafort gave a forecast range of P48.55 to P48.65 per dollar while the trader expects the local unit to move within the P48.60 to P48.80 band. — LWTN with Reuters

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