Peso firms up on hopes for CREATE’s signing into law

The Philippine peso snapped a three-day downtrend on Thursday as it appreciated against the US dollar amid hopes of the signing into law of a measure that will reduce corporate income tax.

The local currency gained 4.5 centavos to close at P48.68:$1 from Wednesday’s finish at 48.725.

“Peso exchange rate closed stronger today versus the US dollar after slightly weakening for three straight days... on possible signing of the CREATE into law any time soon and could lapse into law by March 27, 2021,” Rizal Commercial Banking Corp. chief economist Michael Ricafort said.

The Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which was recently ratified by Congress, is now awaiting Duterte’s signature.

The measure seeks to lower the Philippines’ corporate income tax (CIT) rate from 30% to 25% and rationalize the country’s investment incentives, making them more competitive and transparent, time-bound, targeted, and performance-based. 

The law also provides businesses with economic stimulus measures that will help them recover from the COVID-19 pandemic. 

“Peso also stronger after the [US] Federal Reserve upgraded its GDP (gross domestic product) and employment estimates and most Fed officials signalled zero Fed Funds Rate until 2023, thereby sending most US stock markets to new record highs and supporting global market risk appetite/risk-on mode that benefits emerging markets such as the Philippines,” Ricafort said. — BM, GMA News