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Peso weakens on rising virus cases in Europe, hawkish Fed comments


THE PESO declined on Monday amid concerns over rising cases of the coronavirus in some economies and hawkish comments from US central bank officials.

The peso retreated versus the greenback on Monday amid concerns over the rise in coronavirus infections in some European economies and hawkish signals from the US Federal Reserve.

The local unit closed at P50.65 per dollar on Monday, shedding 24 centavos from its P50.41 finish on Friday, based on data from the Bankers Association of the Philippines.

The peso opened Monday’s session weaker at P50.53 per dollar, which was already its intraday best. Meanwhile, its worst showing was at P50.80 versus the greenback.

Dollars traded increased to $1.402 billion on Monday from $1.187 billion on Friday.

A trader said in an e-mail that cautious sentiment due to rising coronavirus cases in Europe, specifically in Austria and Germany, caused the peso to depreciate against the dollar.

Austria on Friday reimposed a lockdown amid rising infection cases, Reuters reported. German officials have signaled that they may follow the move, noting the country is already in a “national emergency.”

Recent statements from Fed officials about speeding up the tapering of asset purchases also affected the peso, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Reuters reported Friday that Fed Vice Chair Richard Clarida said it may be appropriate to assess a quicker reduction in asset purchases at the Fed’s policy review in December.

Separately, Fed Governor Christopher Waller on Friday said the Fed should double the pace of its tapering exercise in order to finish by April and move forward into providing space for a rate hike by the second quarter of 2022.

For Tuesday, Mr. Ricafort gave a forecast range of P50.50 to P50.70 per dollar, while the trader expects the local unit to move within P50.55 to P50.80. — L.W.T. Noble with Reuters

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