THE PESO appreciated on Monday as the debate on the proposed US debt ceiling dragged on, affecting the dollar.
The local unit closed at P50.70 per dollar on Monday, gaining nine centavos from its P50.79 on Friday, based on the Bankers Association of the Philippines’ data.
The peso opened Monday’s session at P50.74 versus the greenback. Its strongest showing was at P50.68, while its weakest point was at P50.815 per dollar.
Dollars traded dropped to $857.54 million on Monday from $882.16 million on Friday.
“The peso appreciated as the greenback’s appeal waned from the lingering political uncertainty around the US debt ceiling and the prospects of more stimulus bills from the Democrats,” a trader said via e-mail.
Investors are getting more nervous over the looming fiscal crisis if the US Congress does not decide on whether the debt ceiling has to be raised or not to avoid a possible government shutdown and its first-ever default, Reuters reported.
Back home, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the delivery of more coronavirus vaccines sparked optimism on the government’s inoculation drive and the economy’s recovery, which boosted the peso.
“Peso is also stronger as the markets anticipate some seasonal increase in OFW (overseas Filipino worker) remittances and conversion to pesos into the fourth quarter, especially towards the Christmas season,” he added.
Latest central bank data showed OFW remittances rose by 2.5% from the year earlier to $2.853 billion in July, its highest level in seven months or since the $2.89 billion in December 2020.
The trader said the peso could weaken anew on Tuesday on expectations of faster inflation in September.
A BusinessWorld poll of 17 analysts showed a median estimate of 5% for September headline inflation, or near the lower end of the Bangko Sentral ng Pilipinas’ estimate of 4.8%-5.6% for the month.
The Philippine Statistics Authority will report September inflation data on Oct. 5.
Mr. Ricafort said the local unit may range from P50.60 to P50.80 on Tuesday, while the trader gave a slightly wider forecast range of P50.60 to P50.85. — B.M. Laforga with Reuters