Business & Investment

The peso weakens this year as trade recovers

BW file photo

The peso could weaken against the dollar in 2021 and return to the level of 50 pesos per dollar as world trade gradually recovers as regulatory measures are relaxed.

Local units closed at 48.023 pesos per dollar on December 29, the last trading day of 2020, up 2.612 pesos from 50.635 pesos. fiIt will end on December 27, 2019.

Michael L. Ricafort, chief economist at Rizal Commercial Banking, said the peso’s strong finish towards the end of the year was due to the shrinking trade deficit.

“Imports have been relatively slow to recover and the trade deficit has narrowed, resulting in relatively strong pesos in recent months,” Rikafort said in a text message.

According to data from the Philippine Bureau of Statistics, the country’s trade deficit shrank from $ 1,783 million in September to $ 1,777 million in October, a year ago with a decline in inbound shipments of 3,573 million. A dollar gap was recorded.

According to Ruben Carlo O. Asuncion, chief economist at the Central Bank of the Philippines, the local unit was only around 48 pesos per dollar with the support of the Central Bank of the Philippines (BSP), apart from the decline in imports.

“The lack of dollar demand has contributed to the strength of the peso and is likely to continue as the threat of the coronavirus is prolonged,” Asuncion said in a text message.

Demand for the dollar could recover this week as companies replenish and show signs of recovery in economic activity. Asuncion said this could lead to downward pressure on the peso, showing a forecast range of P48.02 to P48.06 against the dollar for the week.

Meanwhile, Rikafort said the market is on the lookout for major data releases.flManufacture and manufacture. This week he expects local units to move from 47.95 pesos to 48.09 pesos against the dollar.

ToflDue to the effects of recent disasters, the population in November increased by 3.3%, faster than 2.5% in October. A Business world A poll of 13 economists estimated a median of 3.2% in December, and analysts say the impact of the typhoon on commodity prices has already subsided.

Philippine Statistics Bureau will release in DecemberflData for January 5th.

Throughout the year, market sentiment towards pesos depends on the pace of import growth and trends related to pandemics and economic recovery prospects.

In 2021, Mr. Ricafort showed the forecast range of P48-P49 against the dollar, but Mr. Asuncion expects the peso to trade at the P48 to P50 level. — — LWT Noble

The peso weakens this year as trade recovers The peso weakens this year as trade recovers

Back to top button