The Philippine peso is expected to remain generally firm against the US dollar as the Christmas holiday nears, a season for increased inflows from overseas Filipino workers (OFWs).
At the end of the trading session last October 29, the local currency finished at 50.415 against the greenback, better than its 50.71 close in the previous day.
In a report, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the local currency ended last week’s trade to its strongest in more than a month, or since September 23.
Aside from optimism on the continued decline in local coronavirus disease 2019 (Covid-19) cases, Ricafort said improved global market risk appetite also supported the local currency.
“(The) peso (is) likewise stronger in anticipation for some increase in OFW remittance and conversion to pesos ahead of the long holiday weekend as the Christmas season and preparations draw closer into November 2021,” he said.
Ricafort forecasts the peso’s major support level in between 50.20 and 50.30 this week for a possible trek to the 49.70 to 50.00 in the coming days.
Bangko Sentral ng Pilipinas (BSP) data show that cash inflows from OFWs have historically been high in the last quarter of the year, as well as before the start of the school openings.
As of August this year, cash remittances grew by 5.7 percent to USD20.38 billion.
Monetary authorities forecast remittances to grow by 4 percent this year, with optimism based on the reports of continued reopening of economies around the globe and continued demand for OFWs, especially those for the medical field.