Peso to move sideways before US tariff deadline
THE PESO could move sideways against the dollar this week as markets await the Trump administration’s Aug. 1 deadline for tariff negotiations.
On Friday, the local unit sank back to the P57 level as it closed at P57.11, plunging by 46 centavos from its P56.65 finish on Thursday, data from the Bankers Association of the Philippines showed.
Week on week, the peso inched up by 3.5 centavos from its P57.145 finish on July 18.
The dollar was broadly stronger on Friday after stronger-than-expected US initial jobless claims data tempered US Federal Reserve rate cut bets, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The US dollar-peso exchange rate also corrected higher lately amid some seasonal increase in importation activities in the third quarter…,” Mr. Ricafort added.
For this week, investors will await developments on tariff negotiations between the US and its trading partners before the Aug. 1 deadline, he said.
“Ahead of US President Donald J. Trump’s Aug. 1 deadline for trade negotiations on a country and industry level, there could be some volatility in the markets, but this is already partly priced in… There is the chance that the worst tariffs could have been seen already for countries, especially those that already entered trade deals with the US, such as the Philippines.”
Last week, Mr. Trump announced a 19% tariff on Philippine goods following a meeting with President Ferdinand R. Marcos, Jr. at the White House. As part of the deal, the Philippines will also open its market to US goods.
The 19% tariff rate is slightly lower than the threatened 20% but is higher than the 17% “reciprocal” tariff announced by Mr. Trump in April. This is the same as Indonesia’s and slightly lower than Vietnam’s 20%.
Mr. Ricafort expects the peso to move between P56.90 and P57.40 against the dollar this week. — AMCS
