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Peso climbs on PMI data

THE PESO appreciated against the greenback on Monday after data showed factory activity deteriorated in April because of the renewed lockdown.

The local unit closed at P48.05 per dollar on Monday, up by five centavos from its P48.10-a-dollar finish on Friday, based on the data from the Bankers Association of the Philippines.

The peso opened the session at P48.10 per dollar and dropped to as low as P48.135. It peaked at P48.022 against the greenback.

Dollars traded fell to $885.2 million yesterday from $1.185 billion on Friday.

Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort attributed the stronger peso to the contraction in the contry’s manufacturing PMI in April.

Mr. Ricafort said the data signalled slower recovery prospects for the economy especially for imports, which could dampen demand for US dollars. He added that the reimposed lockdown could further slow the recovery of imports.

Factory activity in the country declined again in April, snapping a three-month winning streak, after the extended lockdown in Metro Manila and nearby provinces hampered production and weakened demand anew, a survey by IHS Markit showed.

The Philippine Manufacturing Purchasing Managers’ Index (PMI) went down to 49 in April from 52.2 in March “to signal a marginal contraction in operating conditions across the Filipino manufacturing sector.”

Last month’s PMI went below the 50-neutral mark that separates deterioration from expansion, marking the first slump after three consecutive months of growth or since December’s 49.2.

“The peso appreciated anew as the dollar’s appeal weakened with US bond yields remaining relatively subdued,” a trader said via email.

The trader added that the local currency may depreciate against the greenback again ahead of the inflation report for April, which will be released on Wednesday, May 5.

For Tuesday, Mr. Ricafort said they expect the peso to range from P48 to P48.12 per dollar, while the trader gave a wider P48-P48.20 forecast range. — B.M. Laforga

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