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Peso ends at 2-month high

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THE PESO strengthened against the greenback on Tuesday to reach a two-month high following weaker-than-expected US economic data.

The local unit closed at P48.038 per dollar, appreciating by 1.2 centavos from its P48.05 finish on Monday, based on data from the Bankers Association of the Philippines. Tuesday’s close was the peso’s best since Feb. 15, when it ended trading at P47.93 against the greenback.

The peso opened Tuesday’s session at P48.05 versus the dollar. It traded within a narrow range, as its weakest showing was at P48.07, while its intraday best was at P48.02 against the greenback.

Dollars exchanged declined to $730.7 million on Tuesday from $885.2 million on Monday.

A trader attributed the peso’s strength versus the dollar on Tuesday to market preference for the local unit following weaker-than-expected US manufacturing activity data for April.

US manufacturing activity grew at a slower pace in April, restrained by shortages of inputs as rising vaccinations against COVID-19 and massive fiscal stimulus unleashed pent-up demand, Reuters reported.

The survey from the Institute for Supply Management (ISM) on Monday showed record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products across industries.

The ISM’s index of national factory activity fell to a reading of 60.7 last month after surging to 64.7 in March, which was the highest level since December 1983. A reading above 50 indicates expansion in manufacturing, which accounts for 11.9% of the US economy.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso strengthened after US Federal Reserve Chief Jerome Powell’s remarks stressing that the world’s largest economy is already seeing signs of recovery.

Mr. Powell on Monday said the economy is doing better but is “not out of the woods yet,” noting a Fed study showed the pandemic has disproportionately affected the less educated and working parents.

For today, the trader gave a forecast range of P48 to P48.20 per dollar while Mr. Ricafort said the local unit could move within the P47.98 to $48.08 levels. — with Reuters

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