THE PESO appreciated versus the greenback on Thursday as the government kept Metro Manila under general community quarantine (GCQ) and after the US Federal Reserve said it will continue to support the world’s largest economy.
The local unit closed at P50.305 per dollar on Thursday, gaining 6.5 centavos from its P50.37 finish on Wednesday, based on data from the Bankers Association of the Philippines.
The peso opened Thursday’s session stronger at P50.31 per dollar. Its weakest showing was at P50.39, while its intraday best was at P50.27 against the greenback.
Dollars exchanged increased to $993.8 million on Thursday from $686.5 million on Wednesday.
A trader said the peso strengthened after the government maintained its quarantine classification for Metro Manila and nearby provinces.
Presidential Spokesperson Herminio L. Roque, Jr. on Wednesday said Metro Manila will remain under GCQ with “heightened restriction” measures in the first half of August despite rising coronavirus cases due to the spread of the Delta variant.
Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso rose versus the dollar following dovish signals from the Fed.
The Fed on Wednesday retained the interest rates near zero, as widely expected. It has also kept its bond-buying program unchanged, Reuters reported.
Fed Chairman Jerome Powell said data showing stronger job gains will be needed before they start cutting bond purchases.
Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno on Thursday said the recent weakness of the peso is in line with the broad depreciation of most Asian currencies versus the greenback.
The peso’s close on Thursday is lower by P2.382 or 4.7% from its P48.023-a-dollar finish on Dec. 29, the last trading day of 2020.
“The only exceptions are the Chinese yuan and New Taiwan dollar. On the whole, regional currencies have been weighed down by prospects of earlier US monetary policy normalization, as well as uncertainties in their growth outlook due to the ongoing health crisis,” Mr. Diokno said in an online briefing on Thursday.
“We therefore see the recent movements of the peso as reflective of shifts in demand and supply conditions in the foreign exchange market, as well, as emerging external and domestic developments,” he added.
Factors that affected the peso last month include worries over the Delta variant, the Fed’s hawkish shift, and higher corporate demand for the dollar amid the economy’s gradual recovery.
For Friday, Mr. Ricafort gave a forecast range of P50.25 to P50.35 per dollar, while the trader expects the local unit to move within a wider band of P50.20 to P50.45. — L.W.T. Noble with Reuters