Peso weakens further amid US-China talks
THE PESO dropped further against the dollar on Tuesday as markets awaited the outcome of the ongoing trade negotiations between the United States and China.
The local unit closed at P55.83 per dollar, dropping by two centavos from its P55.81 finish on Monday, Bankers Association of the Philippines data showed.
This was a fresh near one-month low for the peso, as this was its worst close since it ended at P55.855 on May 14.
The peso opened Tuesday’s session stronger at P55.75 against the dollar. It climbed to as high as P55.70 intraday but succumbed to weakness as it closed near its worst showing of P55.84 versus the greenback.
Dollars exchanged rose to $1.15 billion on Tuesday from $767.8 million the day prior.
“The peso weakened as the greenback gained from optimism on the US economy from the ongoing trade talks between US and China in London,” a trader said in an e-mail.
“The US dollar-peso exchange rate was slightly higher for the second straight trading day as US-China talks continued for the second day, but with no significant progress seen yet,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The US dollar firmed on Tuesday as talks between Beijing and Washington continued for a second day, stirring investors’ hopes of an easing in trade tensions, Reuters reported.
Officials from the world’s two largest economies were meeting in London to try to defuse a dispute that has widened from tariffs to restrictions over rare earths.
US President Donald J. Trump and his Chinese counterpart Xi Jinping spoke by phone last week at a crucial time for both economies that are showing signs of strain from Mr. Trump’s cascade of tariff orders since January.
The dollar index, which measures the US currency against six others, was 0.3% higher at 99.255, but remained close to a six-week low of 98.351 it touched last week.
The index is down 8.7% this year as investors, worried about the impact of tariffs and trade tensions on the US economy and growth, flee US assets and look for alternatives.
The yen was last little changed at 144.71 per dollar but has gained over 8% against the US currency this year on safe-haven flows during the market tumult unleashed by Mr. Trump’s tariff chaos.
Investor focus this week will be on the US consumer price index (CPI) report for May, due on Wednesday. The report could give insight into the tariff impact when investors are wary of any flare-ups in inflation ahead of the Federal Reserve’s policy meeting next week.
The US central bank is also expected to hold rates steady. Traders are pricing in nearly two 25-basis-point cuts by the end of the year.
The trader expects the peso to move between P55.70 and P55.95 per dollar on Wednesday, adding that a potential uptick in the US CPI may cause the local unit to extend its slide.
For his part, Mr. Ricafort said the peso could trade from P55.73 to P55.903. — Luisa Maria Jacinta C. Jocson with Reuters
