Peso strengthens vs dollar ahead of RTB offering

THE PESO appreciated against the greenback on Monday ahead of the government’s retail Treasury bond (RTB) sale and on preference for the local unit following the US jobs data released on Friday.

The local unit closed at P48.046 per dollar, gaining 2.4 centavos from its P48.07 finish on Friday, data from the Bankers Association of the Philippines showed.

The peso opened Monday’s session at P48.055 per dollar. It traded within a narrow range, as its weakest showing was at P48.06 while its strongest was its close of P48.04 against the greenback.

Dollars traded decreased to $513.05 million on Monday from the $606.05 million seen on Friday.

The peso strengthened versus the dollar ahead of the rate-setting auction for the RTBs on Tuesday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.

The Bureau of the Treasury is looking to raise at least P30 billion from the three-year RTBs that will be sold in multiples of P5,000 from Feb. 9 to March 4, unless ended earlier.

The government offers RTBs to encourage small retail investors to invest, as these have higher returns than prevailing market rates.

Meanwhile, a trader said in an email that the peso’s gains followed the “lackluster US labor reports last Friday.”

US employment growth rebounded moderately in January and job losses in the prior month were deeper than initially thought, strengthening the case for a sizable relief package from the government to aid the recovery from the COVID-19 pandemic, Reuters reported.

The US Labor department’s closely watched employment report on Friday showed job losses in manufacturing and construction, two sectors which have been propping up the economy. There were further job losses at restaurants and bars. Retailers and employers in the transportation industry also laid off workers.

Millions of Americans are experiencing long spells of unemployment and permanent job losses, while others have given up searching for work. President Joseph R. Biden on Friday cited the weak report to push the US Congress to pass a $1.9-trillion recovery plan amid resistance from Republicans, now worried about the ballooning national debt.

Nonfarm payrolls increased by 49,000 jobs last month. Data for December was revised to show 227,000 jobs lost instead of 140,000 as previously reported. Employment is 9.9 million jobs below its peak in February 2020.

The economy also created 250,000 fewer jobs in the 12 months through March 2020 than previously estimated. The Congressional Budget Office has estimated employment would not return to its pre-pandemic level before 2024. Economists polled by Reuters had forecast payrolls rising by 50,000 jobs in January.

December’s drop in payrolls was the first in eight months and came amid renewed restrictions on businesses like restaurants and bars to slow a resurgence in coronavirus infections. Though those curbs on businesses continued into the first half of January, there is reason for cautious optimism as some employment measures have been stabilizing since the second half of January as authorities began easing restrictions.

For today, Mr. Ricafort gave a forecast range of P48.03 to P48.07 per dollar while the trader expects the local unit to move within the P48 to P48.10 levels. — L.W.T. Noble with Reuters

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