THE PESO surged to return to the P48-per-dollar level on Tuesday following signals from President Rodrigo R. Duterte that the stricter lockdown in Metro Manila will be lifted by next week.
The local unit finished trading at P48.92 per dollar on Tuesday, stronger by nine centavos from its P49.01 close on Monday, data from the Bankers Association of the Philippines showed.
The peso opened the session at P49.08 per dollar, which was also its weakest showing for the day. Its intraday best was its close of P48.92.
Dollars traded increased to P743.4 million from the P409.3 million recorded on Monday.
The peso’s gain came after Mr. Duterte’s remarks that the modified enhanced community quarantine (MECQ) is unlikely to be extended beyond Aug. 18, said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.
“The peso closed stronger amid some signals from Malacañang that the MECQ may be eased to GCQ (general community quarantine) after Aug. 18,” Mr. Ricafort said in a text message.
Metro Manila and some nearby provinces have been put back under lockdown in response to the plea of frontline health workers to slow down the continued infection surge and help the healthcare system not reach exhaustion. However, Mr. Duterte on Monday said funds are running out and Filipinos need “to get out and work” in order to eat.
Meanwhile, a trader said the peso’s appreciation was on the back of signals from the central bank that key policy rates are likely to be maintained.
“The peso strengthened after BSP Governor [Benjamin E.] Diokno hinted that the BSP might keep key interest rates unchanged in its policy meeting this month,” the trader said in an e-mail.
Mr. Diokno said on Monday there is “no compelling reason” to move rates sooner and added their monetary policy stance “could hold for the next few quarters” as their aggressive easing earlier this year is already anticipatory in nature.
The 175 basis points in rate cuts so far this year brought the overnight reverse repurchase, lending, and deposit rates to record lows of 2.25%, 2.75% and 1.75%, respectively. The Monetary Board’s next policy-setting meeting is scheduled on Aug. 20.
For today, the trader expects the local unit to move within the P48.80 to P49 band versus the dollar while Mr. Ricafort gave a forecast range of P48.85 to P49.05. — L.W.T. Noble