THE PESO strengthened versus the greenback on Tuesday despite data showing the economy continued to contract in the first quarter.
The local unit closed at P47.81 per dollar on Tuesday, appreciating by 5.5 centavos from its P47.865 finish on Monday, data from the Bankers Association of the Philippines showed.
The peso opened Tuesday’s trading session at P47.90 per dollar. Its weakest showing was at P47.92, while its intraday best was its close of P47.81 against the greenback.
Dollars exchanged rose to $837 million on Tuesday from $715.25 million on Monday.
The peso appreciated as the market factored in the impact of the gross domestic product (GDP) drop seen in the first quarter on the country’s imports, which could affect the currency, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.
“The softer-than-expected GDP could still signal slower economic recovery and slower recovery in imports as well as demand for dollars to pay for these imports,” Mr. Ricafort said in a text message.
Philippine economic output shrank by 4.2% in the January to March period, marking five straight quarters of decline and the longest recession since the Marcos era.
Last quarter’s GDP contraction was also worse than the median estimate of -2.6% in a BusinessWorld poll of 18 analysts last week.
Meanwhile, a trader said the peso rose versus the dollar due to “prospects of loosening quarantine restrictions” in Metro Manila and the adjacent provinces that are currently under the modified enhanced community quarantine (MECQ).
Metro Manila, Cavite, Laguna, Rizal, and Bulacan are under MECQ until May 14. A decision on the restrictions for the rest of May is due to be announced by the Palace within the week.
For today, Mr. Ricafort sees the peso moving at P47.75 to P48.85 per dollar while the trader gave a wider range of P47.80 to P48. — LWTN