Scaling down of businesses favors peso

The Philippine peso closed stronger against the US dollar on Friday as the recent decision of the government to scale down capacities of several businesses favored the local unit.

The local currency gained 6 centavos to close at P48.62:$1 from Thursday’s finish at 48.68.

“The peso exchange rate is stronger versus the US dollar for the second straight day, by P0.06 or 0.1% to close at P48.62, recovering from [its] weakest in seven months, after the reduction in the capacity and scale of some affected business and industries... [This] would slow down the pace of economic recovery,” Rizal Commercial Banking Corp. chief economist Michael Ricafort said.

“Thus, the recovery in imports could also be slower, as well as the demand for US dollars to pay for imports,” Ricafort said.

The government reduced venue capacities of business and religious gatherings to 30% from 50% in areas under general community quarantine (GCQ), until April 4. 

The operational capacity of dine-in restaurants, cafes, and personal care services were limited to 50%. Such establishments in GCQ areas were previously allowed to determine their venues’ own capacity limit “as they see fit” as long as minimum public health standards, including social distancing, are observed.

The government also suspended the operations of driving schools, traditional cinemas, game arcades, libraries, archives, museums, cultural centers, limited social events at accredited establishments of the Department of Tourism, limited tourist attractions (except for open-air ones) in GCQ areas until the said period.

Since the start of 2021, the peso depreciated by P0.597 or 1.2% from its close of P48.023:$1 in end-2020.—LDF, GMA News