March 7, 2021

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Peso to drop vs dollar on import bets

BW FILE PHOTO

THE PESO is likely to weaken against the greenback this week as the market waits for more vaccines to arrive in the country, which could signal a wider economic reopening and bring in more imports.

The local unit finished trading at P48.56 per dollar on Friday, appreciating by six centavos from its Thursday close of P48.62 against the greenback.

Week on week, it also gained three centavos from its P48.59-per-dollar finish on Feb. 26.

The peso’s appreciation versus the dollar on Friday followed the close of the government’s retail Treasury bond (RTB) sale, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.

The Bureau of the Treasury raised P463.3 billion through its offering of three-year RTBs. This is the second-biggest issuance next to the record P516.3 billion in five-year RTBs it issued in 2020.

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Meanwhile, a trader attributed the peso’s movement versus the dollar last week to developments in the US financial market.

“The local currency was little changed last week after Federal Reserve Chairman Jerome Powell said he is monitoring financial conditions and would be “concerned” by disorderly markets, but stopped short of offering specific steps,” the trader said in a Viber message.

Mr. Powell said in a Wall Street Journal forum that they remain committed to maintaining ultra-easy monetary policy until the economy is “very far along the road to recovery.”

The trader added that the peso’s P48.56 close on Friday “signals the rising dollar theme is gaining traction.”

For this week, Mr. Ricafort said the market will be tracking the arrival of more coronavirus disease 2019 (COVID-19) vaccines in the country.

“More COVID-19 vaccine arrivals and rollouts would increase the likelihood of a nationwide moderate general community quarantine sooner, thereby improving market sentiment and the overall economic recovery prospects,” Mr. Ricafort said.

Mr. Ricafort gave a forecast range of P48.45 to P48.75 per dollar while the trader expects the local unit to move within the P48.50 to P48.70 levels. — L.W.T. Noble

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