Peso slips as data show contraction in manufacturing activity

peso slips as data show contraction in manufacturing activity - Peso slips as data show contraction in manufacturing activity

THE PESO slipped versus the dollar on Tuesday on data showing the manufacturing industry contracted in October and ahead of the results of the presidential election in the United States.

The local unit closed at P48.41 against the dollar on Tuesday, inching down by one centavo from its P48.40 finish on Friday, data from the Bankers Association of the Philippines showed.

The peso opened Tuesday’s session at P48.38 against the greenback and climbed to an intraday peak of P48.355. Meanwhile, its weakest showing was logged at P48.42 versus the dollar.

Dollars traded declined to $510.05 million on Tuesday from $817.4 million on Friday.

The market was closed on Monday in observance of All Souls’ Day.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso weakened following the release of data showing the manufacturing industry contracted in October.

“The peso was slightly weaker after softer Philippine manufacturing gauged back to contraction mode, which could lead to slower recovery in imports and slower demand for dollars to pay for imports,” Mr. Ricafort said in a text message.

IHS Markit reported on Tuesday that the latest manufacturing Purchasing Managers’ Index (PMI) for the Philippines declined to 48.5 last month from 50.1 in September, worsening from the uptick in the previous month.

This marked the seventh time the PMI went below the 50 neutral mark that separates expansion from contraction so far this year, but was still softer pace compared with the record lows seen in April or at the height of one of the world’s strictest lockdowns.

Meanwhile, a trader said the peso declined ahead of the US presidential election set later on Tuesday.

“The peso weakened slightly due to some caution ahead of the US election results and following the reimposition of lockdown measures in more European countries,” the trader said in an e-mail.

US President Donald Trump and Democratic rival Joe Biden made a last-ditch push for votes in battleground states on Monday as their campaigns prepared for post-election disputes that could prolong a divisive presidential election, Reuters reported.

Mr. Trump, who is trailing in national opinion polls, has continued to lob unfounded attacks on mail-in ballots, suggesting he would deploy lawyers if states are still counting votes after Election Day on Tuesday.

It is not unusual in the United States for states to take several days or even weeks to count their votes, and a record surge in mail ballots as a result of the coronavirus pandemic could draw out the process further this year.

Mr. Trump, 74, is seeking to avoid becoming the first incumbent president to lose re-election since fellow Republican George H.W. Bush in 1992. Despite Mr. Biden’s national polling lead, the race in swing states is seen as close enough that Mr. Trump could still piece together the 270 votes needed to prevail in the state-by-state Electoral College system that determines the winner.

For Wednesday, Mr. Ricafort expects the peso to range from P48.36 to P48.46 versus the dollar, while the trader sees it moving from P48.30 to P48.50. — KKTJ with Reuters

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