Stronger peso persists towards yearend as remittances pour in

THE peso appreciated further on Monday after another round of stimulus package in the US was signed into law while overseas Filipino workers (OFWs) continue to send remittances during the holidays.

The local currency ended at P48.055 per dollar on Monday, inching up by 1.5 centavos from the P48.07 close at the previous trading session on Wednesday last week, data from the Bankers Association of the Philippines showed.

Financial markets were closed on Dec. 24 and 25 for the Christmas holidays. Trading sessions resume on Monday until Tuesday before it closes again ahead of New Year’s Eve.

The peso opened the session at P48.05 a dollar. Its weakest showing was at P48.06 while peaking at P48.02 versus the greenback.

Total volume of dollars traded went down to $507.38 million on Monday from $679.2 million on Wednesday.

“The peso appreciated slightly after US President Trump finally signed the US stimulus and government funding bill despite his initial disagreements,” a trader said via e-mail on Monday.

US President Donald J. Trump signed into law on Sunday another round of stimulus package worth $2.3 trillion to help the world’s biggest economy bounce back from the economic downturn, based on a report by Reuters.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the stronger peso to the higher remittances from OFWs during Christmas Day and ahead of New Year’s Eve.

“BoP (balance of payments) surplus still among 2-year highs and also near 8-year highs also supported the latest gains of the peso exchange rate,” Mr. Ricafort said in a Viber message.

The central bank reported on Monday that the country’s overall BoP position was at a surplus of $1.47 billion last month, surging by 171% from $541 million in November 2019, but slimmer than the 10-year high surfeit worth $3.44 billion in October.

Last month’s tally brought the year-to-date surplus to $11.79 billion, up by 88% from a year ago.

The 11-month total hit a nine-year high after exceeding the $11.4-billion surplus seen in the entire 2011, based on the central bank’s historical data.

The trader expects the peso to continue appreciating on Tuesday on expectations that more dollars will be entering the country towards the end of the year.

The trader expects the peso trading between P48 and P48.10 versus the greenback on Tuesday while Mr. Ricafort gave a narrower forecast range of P48-48.07 per dollar. — Beatrice M. Laforga

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