THE PESO moved sideways yesterday against the dollar, as market players took profits.
The local currency closed at P51.205 against the greenback on Monday, gaining four centavos from Friday’s P51.245-to-dollar finish.
The peso opened weaker at P51.3 versus the dollar. Its best showing for the day was at P51.34, while it sunk to as low as P51.13 against the dollar.
Dollars traded yesterday reached $464.7 million, a drop from Thursday’s $732.9 million.
Traders attributed the sideways movement with an upward bias to the profit taking done by the investors due to untraded dollars over the weekend.
“Morning trade saw the dollar strengthen after [its strong closing on Friday.] From then on, we saw some profit taking on the back of bunched-up inflows over the weekend,” a trader said over the phone.
Another trader attributed the sideways movement to the lack of significant news released during the day.
“We haven’t seen a lot of movements, everywhere else is still quiet. There’s really not a lot to trade on,” another trader said.
In an e-mail, Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines, said the dollar might show a downward bias this week, “due to expectations of weaker US reports on retail sales, producer prices, and consumer prices.”
“News about a possible delay in the US tax cut may also reduce the greenback’s attractiveness,” he said.
Traders are expecting the peso to trade between P51.10 and P51.36 on Tuesday.
Most Asian currencies were subdued on Monday as uncertainty about US President Donald Trump’s tax reform plans checked investor enthusiasm.
The head of the House of Representatives’ tax-writing committee said on Sunday he would not accept elimination of a federal deduction for state and local taxes, opposing a proposal from Senate Republicans that would hike taxes for some middle class Americans.
“Digesting tax reform banter is an unsavoury business as even the ambient noise is triggering unusual moves across asset classes which has traders scurrying looking for answers,” Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore, wrote in a note.
“But when usual correlations break down, it creates conflicting messages producing a scrambled picture and price discovery becomes virtually impossible,” he said.
The dollar was also pressured by worries over possible delays to Trump’s tax plans, but it managed to move up slightly in Asia.
The dollar index was up versus a basket of currencies during the session, underpinned by a rise in long-term US Treasury yields on Friday.
The South Korean won led the losses among regional currencies, falling 0.3%, in tandem with the KOSPI stock index which eased 0.5% as investor appetite for riskier assets ebbed.
The Chinese yuan, Taiwan dollar and Singapore dollar all lost ground marginally.
Nudging in the positive direction, the Thai baht advanced 0.1% to a near 4-week high, while the Malaysian ringgit also firmed slightly.
The ringgit was supported by Bank Negara Malaysia’s hawkish stance, while Thailand’s strong fundamentals underpinned the baht, said Qi Gao, FX Strategist at Bank of Nova Scotia.
Malaysia’s central bank said on Thursday it may consider reviewing the current degree of monetary accommodation given strength of global and domestic macroeconomic conditions. Inflation for full-year 2017 is expected to come in at the higher end of its forecast range of 3-4%.
The Bank of Thailand senior director Don Nakornthab said exports could grow more than the forecast 8% this year. — Karl Angelo N. Vidal and Reuters