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Peso up on Brexit delay

THE PESO rallied against the dollar on Wednesday with risk-on sentiment in the market rising, as another delay in Britain’s exit from the European Union looms.

The local unit ended at P50.97 against the greenback on Wednesday, stronger by 21 centavos from the P51.18-to-a-dollar close on Tuesday.

The peso opened the session at P51.23 a dollar. Its weakest point for the day was traced at P51.285, while its best shot against the greenback was at its close of P50.97.

Dollars traded on Wednesday slipped to $1.162 billion from $1.396 billion on Tuesday.

The peso’s close, which is its strongest in four months, is supported by risk-on sentiment seen across Asian markets amid a possibility of another Brexit delay, according to a trader.

“The peso recovered against the greenback because of the market taking note of possible delay in Brexit which commenced overnight. By afternoon session, risk-on sentiment was still evident as seen in Asian peers,” he said in a phone call.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the peso’s strength was fueled by data on government expenditure.

“The peso closed stronger after the surprisingly strong data on government expenditures in September, reflecting the government’s catch up on spending…to make up for the slower GDP (gross domestic product) growth in early 2019,” he said in a text message.

The British parliament on Tuesday voted in favor of Prime Minister Boris Johnson’s Brexit plan, but junked his move to fast-track legislation to take Britain out of the EU by Oct. 31.

Meanwhile, data from the Bureau of Treasury released on Tuesday showed that national government expenditures jumped by 39.01% to P415.1 billion in September from the P298.6 billion a year earlier, its best performance since the 42.7% increase recorded in April last year.

For today, the trader sees the peso to play around a range of P50.80-51.10, while Mr. Ricafort forecasts that it will move around the P50.80-51.10 band. — LWTN

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