THE PESO strengthened versus the greenback on Tuesday on the back of an expected slowdown in economic activity following the extension of strict restriction measures in Metro Manila and the dovish tone of the US Federal Reserve during last week’s Jackson Hole symposium.
The local unit closed at P49.76 per dollar, gaining 19.5 centavos from its P49.955 finish on Friday, based on data from the Bankers Association of the Philippines.
The market was closed on Monday in observance of National Heroes’ Day.
The peso opened Tuesday’s session at P49.83 per dollar. Its weakest showing was at P49.87, while its intraday best was at P49.65 versus the greenback.
Dollars traded dropped to $848.73 million on Tuesday from the $922.6 million seen on Friday.
The peso appreciated as Metro Manila remained under the modified enhanced community quarantine (MECQ), Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.
“This could still slow down economic activities, including imports,” Mr. Ricafort said in a text message.
The Palace last week said Metro Manila, Bataan, and Laguna will remain under MECQ until Sept. 7 to prevent the spread of the virus amid a new wave of cases.
Infections rose by 13,827 on Tuesday, bringing the total active cases to 145,562, based on data from the Department of Health. The country registered its highest daily tally of 22,366 on Monday.
Meanwhile, a trader attributed the peso’s strength to risk-off sentiment after Fed Chairman Jerome H. Powell failed to give a specific timeline for the central bank’s plan to taper their asset purchases at the Fed’s Jackson Hole symposium on Friday.
Mr. Powell said there has been clear progress toward maximum employment and that he was of the view that if the US economy evolved broadly as anticipated, “it could be appropriate to start reducing the pace of asset purchases this year,” Reuters reported.
For Wednesday, Mr. Ricafort expects the local unit to move from P49.65 to P49.85 per dollar, while the trader gave a forecast range of P49.60 to P49.85. — LWTN with Reuters