THE PESO may appreciate this week on the back of expected upbeat remittance data, although market players will watch out for the announcement of fresh restriction measures and monitor the country’s coronavirus disease 2019 (COVID-19) situation.
The local unit closed at P50.481 per dollar on Friday, depreciating by 9.1 centavos from its Thursday finish of P50.39, based on data from the Bankers Association of the Philippines.
It also weakened by 8.1 centavos from its close of P50.40 versus the dollar on Aug. 6.
The peso weakened due to market concerns over the possibility of an extended lockdown, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.
Meanwhile, UnionBank of the Philippines, Inc. Ruben Carlo O. Asuncion attributed the peso’s depreciation last week to demand for safe assets like the dollar amid rising COVID-19 infections and data showing the economy’s recovery was dented in the second quarter.
The Philippine Statistics Authority on Tuesday reported that the economy exited recession after 15 months as gross domestic product (GDP) expanded 11.8% in the second quarter, mainly due to base effects from the record 17% decline a year earlier. This brought first-half growth to 3.7%, still below the government’s 6-7% target.
However, GDP fell by 1.3% quarter on quarter in the April to June period against the first three months of 2021, reflecting the impact of the lockdown in March to April.
For this week, Mr. Asuncion said positive expectations on upcoming remittance data may provide support for the peso. June remittance data are scheduled to be reported by the Bangko Sentral ng Pilipinas (BSP) on Monday.
In May, cash remittances rose 13% to $2.382 billion from $2.106 billion a year earlier. It marked the fourth month of inflows rising from year-ago levels and is also the fastest growth pace since the 18.5% in November 2016.
Cash remittances rose 6.3% to $12.28 billion for the first five months of 2021 from $11.554 billion in the same period of 2020. The BSP projects inflows to rise by 4$ this year after the 0.8% decline in 2020.
Meanwhile, Mr. Ricafort said investors will continue to monitor COVID-19 cases while awaiting the government’s decision on whether the lockdown will be extended beyond Aug. 20.
COVID-19 cases in the country rose by 14,249 on Saturday to bring the total active infections to 98,847, based on data from the Department of Health. This was the highest daily tally since the 15,310 logged on April 2.
Business groups including the Employers Confederation of the Philippines, Philippine Chamber of Commerce, and Financial Executives Institute of the Philippines opposed the idea of a possible lockdown extension, citing its adverse impact to the economy.
For this week, Mr. Ricafort gave a forecast range of P50.20 to P50.60 per dollar, while Mr. Asuncion expects the local unit to move within P50.10 to P50.50. — L.W.T. Noble