THE PESO weakened due to ongoing trade tensions between the US and China.

THE PESO slid against the dollar on Wednesday as investors remain wary about trade tensions overseas and amid the decision of the local central bank to raise its interest rates.
The local unit ended the session at P53.48 against the greenback, four centavos weaker than the P53.44-per-dollar finish on Tuesday.
The peso opened the session stronger at P53.33 versus the greenback. It rose to as high as P53.31, while its intraday low stood at its closing rate of P53.48.
Dollars traded declined to $650 million from the $733.7 million tallied the previous day.
Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, said the local unit slid against the dollar on the back of continued market concerns over the trade spat between the United States and China.
“The market is still wary about the US-China posturing on equal trade,” Mr. Asuncion said in a text message on Wednesday.
Meanwhile, a trader noted the peso closed “relatively flat” despite being “generally stronger” within the day ahead of the Bangko Sentral ng Pilipinas (BSP) rate decision.
The local monetary authority raised benchmark rates by 25 basis points effective June 21. BSP Governor Nestor A. Espenilla said the rate-setting Monetary Board decided to hike as inflation expectations “remain elevated” this year.
“We’re also seeing more volatility in the exchange rate, which potentially adds to the dynamics on inflation that we need to be careful about,” Mr. Espenilla said.
May inflation accelerated to a fresh five-year high of 4.6% from the 4.5% logged in April. However, this was lower than the 4.9% expected by the market.
“After the rate hike, however, the market reaction was muted on the offshore peso market mainly because the move was already expected,” another trader said.
Michael L. Ricafort, head of the Economics and Industry Research Division of Rizal Commercial Banking Corp., said the BSP’s decision to hike rates, along with the slight decline in the US government bond yields, “could somewhat be positive for the peso.”
For Thursday, the second trader expects the peso to move between P53.30 and P53.50 versus the dollar, while the first trader and Mr. Asuncion gave a slightly wider forecast range of P53.20-P53.50. — K.A.N. Vidal

RELATED ARTICLESMORE FROM AUTHOR