Peso weakens against dollar ahead of lockdown levels

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The Philippine Peso may fall against the dollar this week as a result of the government’s decision to relax lockdown levels in January.

According to Bankers Association of the Philippines data, the local currency closed at P50.04 per dollar on Friday, up from P50.045 on Thursday.

The peso rose two centavos week on week from its December 17 low of P50.02 per dollar.

The local currency strengthened as remittances from overseas Filipino workers returned home during the holiday season, according to Rizal Commercial Banking Corp. In a Viber message, Chief Economist Michael L. Ricafort stated.

The government’s decision on lockdown levels for early January, as well as the trend in new coronavirus disease 2019 (COVID-19) cases, could have an impact on the exchange rate this week, he said.

He added that the possibility of President Rodrigo R. Duterte signing the 2022 national budget before the end of the year could also have an impact on the exchange rate.

Economic managers expect lockdown measures to be reduced to alert level 1 by the new year.

On Saturday, the Philippines recorded 433 new COVID-19 infections and three Omicron variant cases.

The Budget Department has stated that Mr. Duterte is expected to sign the proposed P5.024-trillion budget for 2022 after Christmas and before the end of the year.

Mr. Ricafort stated that economic data on trade balance, jobless claims, and home prices in the United States could still show some recovery from previous levels when it comes to external factors that could affect the exchange rate.

UnionBank of the Philippines, Inc., on the other hand, In an e-mail, Chief Economist Ruben Carlo O. Asuncion stated that market trading will be driven by limited liquidity amid limited local and international data to be released this week.

Onshore players may be able to strengthen their positions due to low trading volume, he said, but this may be mitigated by the effect of the COVID-19 variant on demand.

Mr. Asuncion predicted a range of P50 to P50.3 per dollar this week, while Mr. Ricafort predicted a range of P49.8 to P50.2.

This article is originally published by Business World. Minor edits were made by the author.