THE PESO weakened on Wednesday, slipping to a near two-week low against the dollar, due to a fresh escalation in trade tensions between China and the United States.
The local unit ended Wednesday’s session at P53.50 versus the greenback, four centavos weaker than the P53.46-per-dollar finish on Tuesday.
This was the peso’s weakest finish in nearly two weeks or since it ended at P53.515 against the dollar on June 28.
The peso immediately traded weaker, opening the session at its intraday low of P53.50 versus the dollar. Meanwhile, its best showing for the day stood at P53.49 versus the US currency.
Dollars traded declined to $355.9 million from the $616.4 million that switched hands the previous day.
A foreign exchange trader said the peso continued to trade within a very tight range on Wednesday.
“However, we traded a little bit weaker for the dollar-peso. We closed near in the [low] end of the range,” the trader said by phone on Wednesday.
Another trader said in an e-mail that the peso weakened “amid renewed escalation of US-China trade wars.”
Investors fear the escalating trade war between the world’s two biggest economies could hit global growth after the Trump administration raised the stakes overnight.
The US government threatened to slap 10% tariffs on $200 billion worth of Chinese goods, Reuters reported.
In a statement, China’s commerce ministry said the US actions were “completely unacceptable,” noting it would complain to the World Trade Organization.
Last week, Beijing responded to the imposition of 25% tariffs on $34 billion worth of imports by imposing tit-for-tat duties on American goods including cars, soybeans and lobsters.
“We’re seeing risk-off sentiment once again…as we are getting news from the US slapping additional tariffs to Chinese goods,” the second trader said. “Because of that, we saw flight to quality. That’s why we saw the dollar [strengthening] against Asian currencies.”
For Thursday, the second trader sees the peso moving between P53.35 and P53.55 versus the dollar, while the other gave a P53.45-P53.65 forecast range.
“The local currency is likely to depreciate ahead of possibly firm US consumer inflation report which might increase expectations of a fourth Federal Reserve rate hike this year,” the first trader noted. — Karl Angelo N. Vidal with Reuters