Peso weakens as budget deficit widens in July

peso weakens as budget deficit widens in july - Peso weakens as budget deficit widens in July

THE PESO weakened slightly on Wednesday on data showing that the country’s budget deficit widened in July.

The local unit closed at P48.52 versus the dollar on Wednesday, depreciating by two centavos from its P48.50-per-dollar finish on Tuesday, data from the Bankers Association of the Philippines showed.

The peso opened Wednesday’s session at P48.52 against the greenback. It climbed to as high as P48.515 during the session while its intraday low was at P48.55 versus the dollar.

Dollars traded sank to $481.5 million on Wednesday from Tuesday’s $674.6 million.

“The latest budget deficit was nearly twice the year-ago level at P75.3 billion,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.

“Government revenues declined by 11.2% as tax slowed amid the COVID-19 lockdown, while it posted 10.4% increase in government expenditures,” Mr. Ricafort said.

The country’s fiscal position swung to a P140.2-billion deficit in July from a P1.8-billion surplus in June, the Bureau of the Treasury reported on Wednesday. This was higher by 86.2% than the P75.3-billion deficit seen in July 2019.

This brought the budget deficit for the first seven months of the year to a record P700.6 billion as pandemic expenses continued to rise while revenues dropped as economic activity remained slow.

For today, Mr. Ricafort expects the peso to move within the P48.45 to P48.60 levels versus the dollar. — KKTJ

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