THE PESO may continue to depreciate this week due to market worries of the economic impact of the coronavirus disease 2019 (COVID-19) as it continues to spread in the country.
The local unit closed at P51.03 on Friday, weakening by 18 centavos from its P50.85 finish on Thursday, according to data from the Bankers Association of the Philippines.
It also declined by 39 centavos from its P50.64-per-dollar close a week ago.
UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion attributed the peso’s decline to the market’s reaction to the rise of domestic COVID-19 infections.
“The peso was holding up early part of the week until yesterday morning when it was clear that local transmission of COVID-19 in Metro Manila is escalating,” Mr. Asuncion said in a text message.
For his part, Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort noted the peso’s close on Friday was the weakest in more than two weeks.
“The drop came a few hours after the announcement of the community quarantine declaration for Metro Manila as this could lead to slower economic growth and some stockpiling by households,” Mr. Ricafort said in a text message.
Metro Manila has been put under “community quarantine” for a month starting March 15 as the government struggles to contain the virus’ spread.
President Rodrigo R. Duterte has also told companies to allow work from home as well as other flexible arrangements to prevent the further spread of COVID-19.
As of press time, COVID-19 patients in the country reached 111, with eight recorded deaths, according to the Department of Health. Most cases were recorded in the capital region, with some patients also testing positive in Laguna, Batangas, and Bataan.
Across the world, the virus has infected more than 138,000 people and has caused the death of more than 5,000.
For this week, analysts said that trading will continue to track developments about the virus.
“[The market will monitor] COVID-19 spread status and further reaction of major advanced countries. I am also waiting for more stimulus and market support from the current government,” UnionBank’s Mr. Asuncion said.
Aside from developments regarding the outbreak, RCBC’s Mr. Ricafort said the peso is also likely to be affected by the central bank’s policy decision this week.
“Major catalyst is the next monetary policy-setting meeting of the BSP (Bangko Sentral ng Pilipinas) on March 19, when there is a possible cut in local policy rates of at least 0.25 [percentage point],” he said.
BusinessWorld’s poll of 13 economists held last week saw 12 expecting a rate cut at Thursday’s meeting due to fears of an economic slowdown due to the virus.
For this week, UnionBank’s Mr. Asuncion gave a forecast range of P51 to P51.50 while RCBC’s Mr. Ricafort expects the peso to move within the P50.80 to P51.25 levels. — L.W.T. Noble