Peso weakens anew vs dollar as gov’t cuts outlook for agriculture sector

BW FILE PHOTO

THE PESO retreated versus the greenback on Wednesday due to risk-off sentiment as the government lowered its target for the agriculture sector’s growth.

The local unit closed at P49.75 per dollar, weaker by 14 centavos from its P49.61 close on Tuesday, based on data from the Bankers Association of the Philippines.

The peso opened Wednesday’s session at P49.85 per dollar, which was also its weakest showing for the day. Meanwhile, its intraday best was at P49.59 versus the greenback.

Dollars exchanged slipped to $1.041 billion on Wednesday from the $1.098 billion recorded on Tuesday.

The revision of the growth target for the agriculture sector and its resulting impact on the economy caused risk-off sentiment, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

The Department of Agriculture on Wednesday said it trimmed its 2021 growth target for the farm sector to 2% from 2.5% previously, citing the impact of the African Swine Fever and the lockdowns.

Meanwhile, a trader attributed the peso’s weakness to safe-haven demand amid reports of the US Treasury department taking steps to prevent hitting their debt ceiling.

US Treasury Secretary Janet Yellen on Monday through a letter to House Speaker Nancy Pelosi and other congress leaders said she was suspending investments in the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund that are not immediately required to pay beneficiaries, Reuters reported.

The move was seen as a step to keep the federal government’s borrowing capacity under a reinstated debt limit. A two-year debt-ceiling suspension expired on Saturday, which means the effectivity of the cap at the current debt level of about $28.5 trillion.

Ms. Yellen warned Congress in late July that a critical date could be Oct. 1, when the government faces $150 billion in mandatory payments as the 2022 fiscal year starts.

For today, Mr. Ricafort gave a forecast range of P49.60 to P49.80 per dollar, while the trader expects the local unit to move between P49.65 to P49.90. — L.W.T. Noble with Reuters