[ad_1]
The local currency is seen as being supported by the Federal Reserve’s policy stance of an interest rate close to zero this week.
RCBC chief economist Michael L. Ricafort said the feds are expected to keep the policy rate close to zero to boost the US economy. The Federal Open Market Committee (FOMC) will meet this week to decide its policy move on interest rates.
“The Fed’s zero rates, as well as near-record US bond yields, have kept the US dollar weak in the past month, still among the lowest in more than two years or since June 2018, as this reduces the attractiveness of the US currency with a reduction in US interest rate profitability, ”said Ricafort.
He explained that the weak demand for the dollar means strength for the peso.
A report from the Union Bank of the Philippines agreed, saying: “We expect confirmation of the Fed’s near-zero interest rate stance at this week’s FOMC meeting, likely to result in another round of USD weakness. “.
The bank that appears in the list added that the indicators of the external account will be insignificant since the reserves of dollars close to $ 100 billion will compensate the decrease in remittances of money abroad.
ING Bank Manila economist Nicholas Antonio T. Mapa said the peso is expected to remain strong for a while.
“Given the still anemic corporate demand for the dollar, with the outlook for general economic activity and imports to remain weak, we expect the peso to remain supported in the short term,” he explained.
Other catalysts are the new cases of Covid-19 and measures to further reopen the local economy, Ricafort said.
On Friday, the peso appreciated 3 cents to close at P48.54 against the dollar. It is among the strongest closures in nearly four years, according to Ricafort.
The peso has strengthened 4.1 percent so far this year.
UnionBank expects the local currency to trade between P48.80 and P48.70 this week. Ricafort, meanwhile, set immediate support at the P48 level at P48.50.
