Peso back at P49 range

Published November 12, 2021, 5:39 PM

by Lee C. Chipongian

The peso appreciated to the P49-level on Friday, Nov. 12, to close the day at P49.85 vis-à-vis the US dollar.

The local currency strengthened from Thursday’s P50.16 after opening at P50.08 on Friday and closing stronger at P49.85.

Analysts’ currency outlook point to the support of the peso at P50 as traders continued to break this level.

BDO Research Group said a sustained break below P50 level could see further test of the P49.50 and even P49.25.

“The local currency rose 0.95 percent week-on-week to P49.85 for the third straight week. This comes after the central bank reiterated its commitment to a market-determined exchange rate,” said BDO analysts. BSP Governor Benjamin E. Diokno has reiterated that they can prop up the peso with healthy reserves which as of end-October, amounted to $108 billion.

“The week’s close at P49.85 highlights further tests towards the P49.25 to P49.50 levels in the near-term. Any pullback, if any, is limited towards the P50 levels,” said analysts.

The peso was last at P49 range in September this year. The last time it averaged at the P49 level was in July this year. The currency has been averaging monthly at P50 since August this year.

The central bank said previously that both businesses and consumers’ expectations that the peso will depreciate against the US dollar in the fourth quarter and in the next 12 months are broadly aligned with their own exchange rate assumptions.

BSP officials said they will however always let the market determine the level of the exchange rate.

The government’s exchange rate assumption is P48 to P53 until 2024. This is a forecast and not a peso-dollar target.

The recent peso depreciation, which saw it lounge at the P50 level since August this year, was mainly due to the dollar strength as investors were on a risk-off sentiment with COVID-19 Delta variant new cases and US Federal Reserve’s impending policy normalization.