THE PESO weakened slightly against the dollar following the new tariffs imposed by China against the US.
The local currency ended at P52.12 against the greenback, four centavos lower than the P52.08-per-dollar finish on Tuesday.
The peso opened the session stronger at P52 versus the dollar. Its intraday low stood at P52.14, while its best showing was at P51.99 against the greenback.
Dollars traded dropped to $504.4 million from the $657.5 million traded on Tuesday.
A trader said the peso weakened against the dollar in the afternoon session following news about the ongoing trade spat between China and the US.
“We traded [weaker yesterday], only in the afternoon, when the news came out that China will be putting also tariffs on US goods worth about $50 billion,” the trader said in a phone interview.
Yesterday, Beijing announced that it will launch another round of tariffs against 106 US imports, including soybeans, cars and whisky, amounting to $50 billion.
This was after it slapped tariffs on 128 American goods including frozen pork, wine and apples.
This is Beijing’s retaliation due to the duties imposed by President Donald J. Trump on Chinese steel and aluminum, as well as the $50-billion tariffs that was the result of a seven-month investigation into alleged intellectual property theft.
“In spite of the initial strength of the peso early today, the recent development on the prospects of a possible trade war between the US and China is rearing its ugly head and suggests a lot of uncertainty in terms of trade between the two largest economies,” Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, said in a text message on Wednesday.
“Although the impact on the Philippine economy is minimal, speculative trading happening cannot be discounted.”
For today, Mr. Asuncion expects the peso to move between P51.80 and P52 versus the dollar, while the trader gave a higher range of P52.05 to P52.25.
“The market is also anticipating the local inflation print to be released [today],” the trader said.
Meanwhile, most emerging Asian currencies edged higher on Wednesday as the dollar was shackled by worries that escalating US-China trade tensions could dent global growth and drag on the US economy.
The US currency has lost about 2.2% against a basket of six major currencies so far this year, with trade tensions adding to earlier concerns that Washington might pursue a weak dollar strategy and the perceived erosion of its yield advantage.
Against a basket of six major currencies, the dollar last traded at 90.133, having edged back from Tuesday’s near two-week high of 90.275.
“Risk sentiment has improved overnight, at least for today, as investors put the fear of an escalating trade war on the back burner. Local currencies are trading with a very robust correlation to risk which is being driven by trade rhetoric,” Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore, said on Wednesday.
“US-China trade tensions will continue to weigh on regional bourses and causing local currencies, for the most part, to trade in tight ranges on lower inflow.”
Among Asian currencies, India’s rupee was the biggest gainer, up as much as 0.2% to a one-week high. — K.A.N. Vidal with Reuters