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Peso drops as US jobs data show continued recovery

peso drops as us jobs data show continued recovery - Peso drops as US jobs data show continued recovery

THE PESO weakened against the dollar on Monday as jobs data out of the United States last week pointed to a continued recovery in the world’s largest economy.

The local unit closed at P48.67 against the greenback on Monday, down five centavos from its P48.62-per-dollar finish on Friday, data from the Bankers Association of the Philippines showed.

The peso opened Monday’s session at P48.58 per dollar and reached an intraday high of P48.555. Meanwhile, it closed at its lowest point for the day.

Dollars traded climbed to $765.80 million on Monday from the $689.60 million logged on Friday.

A trader said the peso dropped versus the dollar as the US recorded a higher employment rate in August.

“The peso weakened following the release of upbeat US jobs report for August… last Friday,” the trader said in an e-mail.

US employment growth slowed further in August and permanent job losses increased as money from the government started running out, raising doubts on the sustainability of the economy’s recovery from the deep COVID-19 recession, Reuters reported.

Nearly a fifth of the job gains reported by the US Labor department on Friday were from the government’s temporary hiring for the 2020 Census. While the unemployment rate fell below 10%, it was biased down by a continuing misclassification problem.

Non-farm payrolls increased by 1.371 million jobs last month after advancing 1.734 million in July. Government employment rose 344,000, with 238,000 temporary workers hired for the decennial census.

Excluding government, payrolls rose 1.027 million. Private sector employment gains were led by the retail sector, with 249,000 jobs created. Though professional and business services added 197,000 jobs, more than half of the gain was in temporary help services, reflecting the uncertain economic environment.

Employment in leisure and hospitality increased by 174,000 jobs, but hiring has stepped down from June and July when 2.0 million and 621,000 jobs were added respectively. Manufacturing employment rose 29,000 and construction added 16,000 jobs.

Meanwhile, Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said the peso weakened as the country recorded the smallest surplus in its balance of payments (BoP) in July.

The country posted an $8-million BoP surplus in July, the smallest in more than seven years, amid a surge of inflows from foreign borrowings of the National Government to fund its coronavirus pandemic response, data released by the Bangko Sentral ng Pilipinas on Friday showed.

The July figure was lower than the $248-million surplus in July last year and the $80-million surfeit in June. The BoP position has been in surplus for four straight months.

The central bank expects the overall BoP position to post a surplus of $600 million by yearend, which is equivalent to 0.2% of gross domestic product.

For today, the trader expects the local currency to range from P48.50 to P48.70 versus the dollar while Mr. Ricafort sees the peso moving within P48.60 to P48.75. — KKTJ with Reuters

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