Peso opens 2021 with slight gains vs. US dollar

The Philippine peso posted slight gains against the US dollar on the first trading day of 2021, following the release of economic data earlier during the session.

The local currency gained 0.3 centavos to close at P48.02:$1 versus the previous finish of P48.023:$1 on December 29, 2020, the last trading day of 2020.

Earlier on the session, IHS Markit reported the Philippines Purchasing Managers' Index (PMI) at 49.2 in December versus 49.9 in November. The PMI is a composite indicator of the manufacturing sector’s performance, with 50.0 as the threshold. A reading above 50 indicates growth, while below 50 is a contraction.

"[T]his would lead to some softness in imports data that would reduce the demand for US dollars to pay for imports amid continued GCQ in Metro Manila since June 2020," Michael Ricafort, chief economist at the Rizal Commercial Banking Corp. (RCBC), said in a mobile message.

"The new coronavirus variant could lead to slower economic recovery globally and locally, as well as slower pick up in imports, thereby could still support a relatively stronger peso," he added.

Ricafort also attributed Monday's close to the long New Year holiday weekend, which may have led to accumulated US dollars that were converted to pesos for holiday spending.

"Peso also stronger a day before the latest inflation data, which could ease after the transitory effects of storm damage by Typhoons Ulysses and Rolly, but offset by Tropical Depression Vicky," he said. — RSJ, GMA News