Coronavirus worries spill over to forex market as peso sinks to 5-month low
MANILA, Philippines — The peso fell to its weakest level in more than five months on Monday as fears of the economic repercussions of coronavirus disease-2019 (COVID-19) outbreak spills over to the foreign exchange market.
At the start of the trading week, the local unit closed at 51.33 against the greenback, 36 centavos weaker than its previous finish of 50.97 last Friday.
This was the peso’s worst showing for the day and its weakest close since Oct. 17, 2019, or when it finished at P51.42 versus the US dollar.
Dollars traded amounted to $422.7 million, lower than last Friday’s $576 million.
“This can be attributed again to the worsening corona virus spread,” UnionBank of the Philippines chief economist Ruben Carlo Asuncion said in a text message.
The peso’s latest closing was a departure from its general resiliency over the past tumultuous week for investors rattled by a COVID-19 outbreak yet to put under control, and the month-long quarantine of Luzon where around 70% of economic activity emanates.
The announcement of the Bangko Sentral ng Pilipinas of a P300-billion bond-buying program also did little to appease the market, although since the program was made public with few minutes left in trading, investors unlikely factored it in making their bets.
For Michael Ricafort, chief economist at Rizal Commercial Banking Corp., the peso followed a weakening trend from the US where “continued volatility” in the stock market is giving investors some headache.
Ricafort said global stock markets retreated after the US senators failed to agree on a trillion-dollar proposal to rescue the US economy, the world’s safe haven, from the coronavirus economic fallout.
That reverberated in the Philippines, Ricafort said, where the Philippine Stock Exchange index retreated anew on Monday, albeit more tempered than the massive 24% drop last Thursday, losing 35.39 points of 0.74% to close at 4,743.37.
On Monday, the Philippine Stock Exchange index retreated anew, albeit more tempered than past few days, losing only 35.39 points or 0.74% to end trading at 4,743.37, after regulators restricted the magnitude of fall stocks can endure in a day.
“The peso exchange rate closed weaker today…amid higher US dollar vs major ASEAN/Asian/global currencies, amid continued volatility in the US/global stock markets,” Ricafort said.
On Monday afternoon, the Department of Health reported 82 new COVID-19 casesin the Philippines, the highest daily jump for the country so far, which brought the national tally to 462. Of those, 33 died due to infection complications, while 18 recovered.