Peso weakens as stock investors take profit
THE peso further weakened on Thursday as investors took profit in US stocks amid the rising number of cases of coronavirus disease 2019 (COVID-19) abroad.
The local currency closed at P48.56 versus the dollar on Thursday, up by nine centavos from P48.47 finish on Wednesday, data from the Bankers Association of the Philippines showed.
The peso opened Thursday’s session at P48.60 per dollar. It reached a peak at P48.51 during the session, while its weakest showing was at P48.61.
Dollars traded amounted to $585.15 million on Thursday from $580.05 million the previous day.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso was weaker amid increasing cases of COVID-19 in the US.
“The peso closed weaker for the third straight day amid the latest sell-off in the US stock markets that led to some demand for the US dollar as a safe haven, largely due to concerns that the spike in COVID-19 cases could lead to risk of new lockdowns,” Mr. Ricafort said in a text message.
The US Centers for Disease and Control Prevention reported COVID-19 cases have climbed to over 6 million across the states.
The US stock indices continued its decline in over a month. On Wednesday, Dow Jones closed lower by 1.92%. Nasdaq Composite slid 3.02%, while S&P 500 fell 2.37%.
A trader said profit taking in US stocks may continue as the US government delays the approval of a stimulus package to combat the effects of COVID-19.
“The peso depreciated amid increasing market caution from the dimming prospects of an approved stimulus bill before the US November 2020 presidential elections,” the trader said in an e-mail.
The White House recently agreed on a $1.3-trillion stimulus after rejecting a $2.3-trillion proposal from lawmakers in the Democratic Party.
Federal Reserve Chairman Jerome Powell said on Wednesday a bigger stimulus package is urgently needed to save the US stock market and help the US economy recover soon.
For today, Mr. Ricafort sees the peso moving from P48.50 to P48.65, while the trader expects the local currency to range from P48.45 to P48.65. —