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Peso weakens on positive US data, stimulus talks

peso weakens on positive us data stimulus talks 816x445 - Peso weakens on positive US data, stimulus talks

THE PESO weakened on Wednesday as the US government resumes talks on a stimulus fund.

The local unit closed at P48.53 versus the greenback on Wednesday, down five centavos from its P48.48-a-dollar finish on Tuesday, data from the Bankers Association of the Philippines showed.

The peso opened Wednesday’s session at P48.53 against the greenback, which was also its intraday best. It slid to a low of P48.63 per dollar during the session.

Dollars traded dropped to $701.95 million on Wednesday from Tuesday’s $819.1 million.

Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said the peso weakened versus the dollar as US President Donald Trump looks to enact new stimulus measures.

“The peso was weaker versus the dollar after news of possible revival of talks on new stimulus measures between the Democrat and the Republican lawmakers, which were delayed last month,” Mr. Ricafort said.

President Donald Trump is willing to sign a $1.3-trillion coronavirus relief bill, a top aide said on Friday, Reuters reported. The new figure was put forward by White House Chief of Staff Mark Meadows.

Three weeks after talks on Capitol Hill broke down without a deal on legislation to help Americans suffering from the coronavirus pandemic, Mr. Meadows said the Republican president was “right now willing to sign something at $1.3 trillion.”

Meanwhile, a trader said the dollar rose as US manufacturing activity expanded in August.

US manufacturing activity increased more than expected in August as new orders surged to their highest level in over 16-1/2 years, but employment at factories continued to lag amid safety restrictions intended to slow the spread of COVID-19, Reuters said in a separate report.

The Institute for Supply Management said its index of national factory activity increased to a reading of 56.0 last month from 54.2 in July. That was the highest level since November 2018 and marked three straight months of growth.

A reading above 50 indicates expansion in manufacturing, which accounts for 11% of the US economy.

For today, Mr. Ricafort expects the peso to trade from P48.45 to P48.60 versus the dollar, while the trader sees the local unit moving within P48.45 to P48.65. — K.K.T. Jose with Reuters

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