Peso weakens versus the dollar on higher foreign external debt

peso weakens versus the dollar on higher foreign external debt - Peso weakens versus the dollar on higher foreign external debt

THE PESO weakened slightly versus the dollar on Thursday on data showing increased borrowings from the foreign market and as coronavirus cases in the United States increased.

The local unit closed at P48.39 versus the dollar on Thursday, declining by 1.5 centavos from its P48.375 finish on Wednesday, data from the Bankers Association of the Philippines showed.

The peso opened Thursday’s session at P48.43 per dollar and strengthened to as high as P48.38. Meanwhile, its intraday low was at P48.45 against the greenback.

Dollars traded declined to $524.15 million on Thursday from $534.6 million in the previous session.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso weakened as economic uncertainties continue to linger, with coronavirus cases in the United States seeing an uptrend.

“The peso was weaker after the increased volatility in the global financial markets with the renewed surge in global COVID-19 cases,” Mr. Ricafort said in a text message.

The dollar held gains against a basket of major currencies on Thursday as escalating coronavirus cases in Europe stoked investor fears that fresh lockdowns would further hit the already fragile economic recovery, Reuters reported.

The safe-haven greenback steadied against a basket of six currencies at 93.39, taking a pause after its 0.3% gains in early trade.

Concerns of further damage to the economy grew as France and Germany went back into lockdown on Wednesday, as a massive second wave of coronavirus cases threatened to overwhelm Europe.

Traders also braced for volatility with the US election less than a week away, while the country, like Europe, also faces an increase in coronavirus infections.

With former US Vice President Joe Biden consistently leading in the polls over US President Donald Trump, traders are cautiously betting on his victory and a possible “blue wave” outcome, where Democrats control both chambers of Congress.

Data due on Thursday includes US third-quarter gross domestic product, which analysts expect to show record growth but not enough to make up for the pandemic’s impact.

Meanwhile, a trader said the peso inched down after the release of data showing an increase in the Philippine government’s foreign debt as of end-September.

The Bureau of the Treasury reported on Wednesday that the country’s external debt reached P2.93 trillion in September, inching up by 1% from P2.9 trillion in August and jumping 11% from the comparable year-ago period.

Total outstanding debt stood at P9.369 trillion at end-September, 2.6% lower than the level recorded in August but 18% higher year-on-year, as the government continues to spend amid the coronavirus pandemic.

For today, Mr. Ricafort sees the peso moving from P48.35 to P48.45 versus the dollar, while the trader expects a range of P48.40 to P48.45. — KKTJ with Reuters

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