THE PESO strengthened versus the dollar on Monday as the market expects the economy to have rebounded in the third quarter from its double-digit contraction in the April to June period.
The local unit closed at P48.145 versus the dollar on Monday, rising by 7.5 centavos from its P48.22 finish on Friday, data from the Bankers Association of the Philippines showed.
The peso opened Monday’s session at P48.15 against the greenback and reached an intraday high of P48.11. Meanwhile, its weakest showing for the day was at P48.18 versus the dollar.
Dollars traded declined to $679.3 million on Monday from $779 million in the previous session.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso went up as the market expects a smaller economic contraction in the third quarter.
“Peso was stronger a day ahead of the latest third-quarter GDP (gross domestic product) data, which is expected to improve from the record contraction of -16.9% year-on-year in the second quarter,” Mr. Ricafort said in a text message.
A trader said in an e-mail on Monday that a better economic performance will increase demand for peso.
The Philippine economy is expected to have declined in the third quarter, though at a slower pace than the previous three-month period amid relaxed lockdown restrictions, economists said.
A BusinessWorld poll of 19 economists yielded a median estimate of a 9.2% decline in gross domestic product (GDP) in the third quarter, easing from the downward-revised 16.9% plunge in the second quarter.
If realized, this will bring the GDP contraction in the first three quarters of 2020 to 8.9%.
The government expects the economy to shrink between 4.5% and 6.6%, or an average of 5.5%, this year.
The Philippine Statistics Authority will report third-quarter GDP data on Tuesday.
Mr. Ricafort sees the peso moving from P48.08 to P48.18 versus the dollar, while the trader expects a range of P48 to P48.20. — KKTJ