Peso weakens as virus infections continue surge

BW FILE PHOTO

THE PESO depreciated against the dollar on Wednesday as market players remained cautious amid a fresh surge in coronavirus infections and before the central bank’s policy meeting.

It closed at P48.665 a dollar, weaker than its P48.631 close on Tuesday, according to data posted on the Bankers Association of the Philippines website.

The peso started trading at P48.69 a dollar, weakened to as much as P48.70 and strengthened to as much as P48.665.

Dollars exchanged fell to $649.75 million from $716.34 million on Tuesday.

Cautious market sentiment before the Bangko Sentral ng Pilipinas (BSP) policy meeting may have also caused the peso to weaken.

Nineteen analysts in a BusinessWorld poll last week unanimously said they expected the central bank to keep policy rates to support the economy amid the pandemic.

They also expect the monetary policy pause amid a decline in lending activity and rising consumer prices due to low supply after recent typhoons and an African Swine Fever outbreak.

The key policy rate is at 2% after the BSP slashed rates by 200 basis points during the health crisis last year.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the weaker peso to risk-off sentiment amid the surge in infections.

The Department of Health reported 6,666 new cases on Wednesday, bringing the total to 684,311. The daily tally hit a record 8,019 infections on Monday.

Mr. Ricafort expects the peso to trade at P48.60 to P48.70 on Thursday. — Luz Wendy T. Noble