Peso hits nearly 2-mo low on Covid-19 fears
Credit to Author: Mayvelin U. Caraballo, TMT| Date: Wed, 26 Feb 2020 17:28:40 +0000
THE Philippine peso dropped to its weakest in almost two months, returning to P51 against the US dollar on Wednesday.
The local currency, which opened at P51.08 versus the greenback, lost 7 centavos to close at P51.03. It was the peso’s softest finish since the P51.09:$1 closing on January 3.
Union Bank of the Philippines (UnionBank) chief economist Ruben Carlo Asuncion attributed the peso’s performance to worries over the coronavirus disease 2019 (Covid-19) outbreak.
“The peso’s weakness was largely influenced by fears that the Covid-19 epidemic is further escalating into a pandemic, with rising infections in various countries outside of China,” he explained.
First emerging in the city of Wuhan in China’s central Hubei province in December, Covid-19 has spread to more than two dozen countries. It has killed more than 2,700 people — including one, a Chinese tourist, in the Philippines earlier this month — and infected over 81,000 others as of Wednesday.
Asuncion said Asian currencies were expected to take a beating the rest of the weak as the pathogen spread continues on.”
“Relief may come with some good news coming out of China with regard to the containment of the virus,” he added.
The UnionBank economist expects the peso to weaken further to P51.30 on Thursday.
Wednesday’s finish fell within the P50.3-P51.1 peso-dollar exchange rate range projected by Singapore-based bank DBS for this year.
In a report, DBS FX strategist Philip Wee said the peso would not be immune to Covid-19.
“Initial optimism for the government’s goal to lift growth [to] 6.5- [to] 7.5 percent in 2020 from an eight-year low of 5.9 percent in 2019 has waned,” he added.
Wee also said large infrastructure projects in the pipeline would not buffet the economy from the headwinds of Covid-19 and the January 12 eruption of Taal Volcano.
Tourism will be hurt by fewer arrivals, not only from China but also South Korea, Japan and Taiwan, according to him, echoing most analysts and observers.
Last year, the peso ended at P50.63 against the dollar, marking a 3.70-percent appreciation from the P52.58:$1 posted on Dec. 28, 2018 and fell below the government’s P51.00-52.00:$1 exchange rate assumption for the year.