Peso climbs on signing of tax reform law

THE PESO strengthened versus the greenback on Monday following the passage of a key tax reform law and a decline in oil prices.

The local unit closed at P48.415 per dollar yesterday, gaining 7.5 centavos from its P48.49 finish on Friday, data from the Bankers Association of the Philippines showed.

The peso opened Monday’s session at P48.47 versus the dollar. Its weakest showing was at P48.51, while its intraday high was its close of P48.415 against the greenback.

Dollars exchanged declined to $576.4 million yesterday from the $740.8 million seen on Friday.

The peso strengthened on the back of the signing of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act on Friday, a trader said.

Republic Act 11534 was signed by President Rodrigo R. Duterte on Friday. It will immediately bring down corporate income tax to 25% from 30% and will further cut it by a percentage point every year from 2023 to 2027 until it reaches 20%.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the peso’s appreciation to lower oil prices.

“[T]his could reduce the country’s oil imports,” Mr. Ricafort said in a text message.

After four sessions of price swings, oil prices slightly stabilized on Monday as continued efforts to dig out the giant container ship clogging the Suez Canal eased market worries, Reuters reported.

Brent oil slipped 0.3% or 18 cents to $64.39 a barrel by 0141 GMT while the price of US crude dropped 22 cents or 0.4% to $60.75 per barrel.

For today, the trader expects the local unit to move within P48.30 to P48.50 per dollar, while Mr. Ricafort gave a forecast range of P48.36 to P48.46. — L.W.T. Noble with Reuters