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Lockdown, surge in COVID cases seen to weaken peso

THE PESO may depreciate versus the greenback this week due to cautious sentiment amid the continued increase in coronavirus disease 2019 (COVID-19) cases as well as the extension of the lockdown.

The local unit finished trading at P48.53 a dollar on Wednesday, gaining 1.5 centavos from its P48.545 close on Tuesday, based on data from the Bankers Association of the Philippines. Trading was suspended from Thursday to Friday in view of the Holy Week holidays.

The currency also appreciated by four centavos from its P48.49 finish on March 26.

The peso’s strength on Wednesday was due to some downward adjustment in global oil prices, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.

Reuters reported that oil prices declined by more than 1% on Tuesday following the reopening of the Suez Canal after being blocked by a container carrier for nearly a week.

Brent crude price declined 1.2% or 84 cents to $64.14 per barrel. Meanwhile, the West Texas Intermediate ended the session with its price falling by 1.6% or $1.01 to $60.55 a barrel.

Meanwhile, a trader said in a Viber message that the peso gained while the market “awaits  the  central  bank’s  latest  assessment  on inflation.”

A BusinessWorld poll of 13 analysts last week yielded a median estimate of 4.8% for March inflation, as analysts cited food and transport prices may have caused a faster increase in commodity prices. The central bank said it sees inflation within 4.2% to 5% last month, beyond its 2-4% target.

For this week, Mr. Ricafort said the market would consider the impact of the extended lockdown and the trend of infection cases.

Presidential Spokesperson Herminio “Harry” L. Roque said in a briefing on Saturday that the lockdown in Metro Manila, Cavite, Laguna, Rizal, and Bulacan is extended for another week until April 11.

COVID-19 cases in the country rose by 12,576 on Saturday to bring the total to 784,042. Active cases hit 165,576 at a time when healthcare facilities are again under immense pressure to accommodate the rising infections.

Mr. Ricafort also expects the market to be on the lookout for key data releases in manufacturing as well the inflation.

The Philippine Statistics Authority will release the March inflation data on April 6.

Meanwhile, IHS Markit will report the country’s Manufacturing Purchasing Managers’ Index this Monday. The reading stood unchanged for the second straight month at 52.5 in February, reflecting factory activity was in an expansionary mode due to a pickup in demand as more businesses reopened.

Mr. Ricafort gave a forecast range of P48.40 to P48.65 for this week while the trader said the peso might move within P48.40 to P48.70 per dollar. — Luz Wendy T. Noble

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