Peso weakens versus the dollar as manufacturing PMI ends below 50

THE PESO weakened against the greenback on Wednesday amid profit taking and after a contraction in the manufacturing sector due to the Luzon lockdown.

The local unit finished trading at P50.88 per dollar yesterday, shedding 20 centavos from its P50.68 close on Tuesday, according to data from the Bankers Association of the Philippines.

The peso opened the session at P50.70 per dollar. Its weakest showing for the day was at P50.93, while its strongest intraday level was seen at P50.67 against the greenback.

Dollars traded went down to $346 million from $363.1 million on Tuesday.

A trader said despite the weaker peso at the close of the session, trading was mostly sideways.

“In the past days, the peso strengthened, so today was for profit taking and the start of reversal although it’s not full reversal as it did not reach the P51 figure,” the trader said in a phone call on Wednesday.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso’s decline came after news of a contraction in local manufacturing activity.

“The peso exchange rate closed weaker after the latest decline in the Philippine manufacturing gauge,” Mr. Ricafort said in a text message.

The IHS Markit Philippines Manufacturing Purchasing Managers’ Index released Wednesday

showed a reading of 39.7 for March which means a contraction, as it fell below the 50 mark which signifies growth.

This was also lower than the 52.3 seen in February and the 51.5 logged in the same month in 2019.

“The lockdown of Luzon island to halt the spread of coronavirus disease 2019 (COVID-19) had a dramatic impact on the Philippines manufacturing sector in March,” IHS Markit said in a report.

The enhanced community quarantine is set to end on April 12 if officials see the virus outbreak has been contained.

As of Tuesday, health officials reported that COVID-19 cases in the country reached 2,084, with 88 deaths and 49 recoveries.

For today, both Mr. Ricafort and the trader expect the peso to trade within the P50.70 to P51 range versus the dollar.

Meanwhile, Asian currencies eased on Wednesday as investors braced for a steep economic slump in the wake of lockdowns in many countries to contain the coronavirus’ spread, although losses were limited by the US Federal Reserve’s move to increase dollar liquidity, Reuters reported.

The Fed on Tuesday broadened the ability of dozens of foreign central banks to access US dollars during the coronavirus crisis by allowing them to exchange their holdings of US Treasury securities for overnight dollar loans. —