Peso retreats as daily COVID-19 cases tick back up

The Philippine peso retreated against its US counterpart on Monday, as the country reported a higher number of confirmed cases of the coronavirus disease 2019 (COVID-19).

The local currency lost 1.2 centavos to close at P48.1:$1 versus last Friday's finish of P48.088:$1.

The Department of Health (DOH) on Monday reported 2,052 new infections, the highest number of new cases reported in a day since December 18.

"The peso exchange rate closed slightly weaker... after new COVID-19 cases locally reached the higher in three weeks (since December 18) and also among 1.5-month highs (since November 29), back to above 1,000 per day levels as this may reflect the lagged effects of the Christmas/New Year holidays," Michael Ricafort, chief economist at the Rizal Commercial Banking Corporation, said in a mobile message.

"Peso also weaker after softer data on (foreign direct investments) and (non-performing loans), as well as the softer US jobs data, which raises the urgency for a bigger US stimulus, the details of which to be announced by Joe Biden on Thursday," he added.

Ricafort noted that offsetting positive factors include the recent COVID-19 vaccine supply agreements, and Fitch's affirmation of the country's credit rating.

Fitch Ratings on Monday maintained the country's long-term foreign-currency issuer default rating (IDR) at "BBB" indicating that the country has "adequate" capacity to repay financial commitments, but this could be impaired by adverse business or economic conditions. — BM, GMA News