Peso drops on safe-haven demand for the dollar

THE PESO retreated against the greenback on Tuesday as coronavirus cases continue to surge in the Philippines and on the possibility of additional stimulus in the United States.

The local unit finished trading at P48.631 per dollar on Tuesday, shedding 5.1 centavos from its P48.58 close on Monday, data from the Bankers Association of the Philippines showed.

The peso opened Tuesday’s session at P48.56 per dollar. Its weakest was at P48.645 while its intraday best was at P48.55 against the greenback.

Dollars exchanged increased to $716.34 million on Tuesday from $634.8 million on Monday.

The peso weakened due to the market’s preference for the dollar as US government officials are said to consider more stimulus, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Reuters, citing a source, reported that US President Joseph Biden will meet with advisers to discuss proposals considered by the White House on new proposals to support infrastructure and jobs. The advisers are weighing to recommend about three to four billion for a new legislative action that will support the agenda.

Mr. Ricafort said the peso was also affected by the sustained increase in local coronavirus infections.

Cases rose by an all-time daily high of 8,019 on Monday. On Tuesday, the Department of Health reported 5,876 new infections to bring the tally to 677,653.

A trader said the peso depreciated due to renewed concerns as the pandemic stretches on.

“The peso weakened from safe-haven demand owing to stricter lockdowns globally and mounting doubt about the safety of some vaccines following reported adverse effects in the recent weeks,” the trader said in an email.

Mr. Ricafort gave a forecast range of P48.58 to P48.68 per dollar, while the trader expects the local unit to move within the P48.50 to P48.70 band. — LWTN with Reuters