THE PESO may appreciate versus the greenback this week as the market widely expects the central bank to keep rates low to support the economy.
The local unit finished trading at P49.95 per dollar on Friday, gaining two centavos from its P49.97 close on Thursday, data from the Bankers Association of the Philippines showed.
However, it weakened by 8.5 centavos from its close of P49.865 versus the dollar on Sept. 10.
The peso strengthened against its Thursday close amid the arrival of more vaccine doses in the Philippines, which boosted prospects for herd immunity and economic recovery, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.
Additional 661,200 doses made by AstraZeneca Plc were delivered to the Philippines on Friday morning. They were procured by the private sector through the National Government.
The country has already received over 58.2 million doses of coronavirus vaccines since February.
Despite this, the country’s fully vaccinated rate of 16.63% remains relatively low compared with its regional neighbors, only faring better than Indonesia (16.3%) and Vietnam (6.21%), based on latest data from the vaccine tracker of the Johns Hopkins University. The government is targeting to vaccinate 70% of the population by end-2021.
Peso-dollar trading last week was also affected by upbeat remittance data.
Cash remittances increased by 2.5% to $2.853 billion in July from $2.783 billion a year earlier, based on data released by the Bangko Sentral ng Pilipinas (BSP) on Wednesday. July’s inflows were the biggest since the $2.89 billion in December.
This brought cash remittances for the first seven months of 2021 to $17.771 billion, up 5.8% from the $16.802 billion in the same period of 2020.
This week, Mr. Asuncion said the market will take its cue from the Bangko Sentral ng Pilipinas’ (BSP) monetary policy review on Sept. 23.
A BusinessWorld poll last week showed 17 out of 18 economists see the BSP keeping its key policy rate at an all-time low of 2%.
Analysts said policy support from the BSP remains crucial as the country has become the region’s “laggard” in terms of economic recovery from the pandemic. They said the Monetary Board will likely look past the beyond-target inflation as it is mainly caused by low supply.
Meanwhile, Mr. Ricafort said more vaccine arrivals and the increase in infections could also provide leads for investors.
Infections rose by 23,153 on Saturday, which was the second-highest daily tally after the 26,603 logged on Sept. 11. This brought active cases to 184,088, the Department of Health reported.
For this week, Mr. Ricafort gave a forecast range of P49.70 to P50.15, while Mr. Asuncion expects a slightly wider band of P49.70 to P50.20 per dollar. — L.W.T. Noble