THE PESO gained strength on Friday to return to the P50 level versus the dollar to its best showing in over a month as overseas developments – particularly rising geopolitical tensions – allowed the currency to pick up.

The local unit closed at P50.725, up by 35.5 centavos from the P51.08-per-dollar finish on Thursday. This is also the best exchange rate logged since a P50.575 finish on Aug. 9.

The peso generally appreciated during the session as it opened at P50.97, which also happened to be its weakest showing for the day. It touched P50.72 as its best intraday rate.

Traders said the peso leveraged on weak offshore markets as it surged against the greenback, with one nothing that good progress on the government’s tax reform plan likely provided additional support for the currency.

“We closed stronger and it is driven more of by the lower offshore markets. Actually, we didn’t track the global move on Friday,” one trader said in a phone interview, adding that the dollar was generally “slightly weaker” that day.

Reuters reported that the dollar buckled on Friday following a fresh string of geopolitical unrest between North Korea and the United States.

North Korean leader Kim Jong Un retaliated towards US President Donald J. Trump, saying that Pyongyang will consider the “highest level of hard-line countermeasure in history” in response to Mr. Trump’s scathing words before the United Nations General Assembly earlier this week.

The North Korean leader also branded Mr. Trump as “mentally deranged” in a rare statement released on Friday. This added fire to simmering tensions between Pyongyang and Washington, following a series of missile launches over the water of Japan, a known US ally, over the past weeks.

A second trader pointed out that the “encouraging” progress in Senate of the Finance department’s tax reform plan piqued market optimism towards the Philippines, which in turn pushed the peso lower.

“If it’s true that the tax reform is headed closer to passage…and if it’s going to happen soon, we’ll be on the radar for foreign direct investments and even speculative flows. A lot of positions were taken for a weak peso. We can play catch up if we see this progress,” the trader said, noting that he saw “aggressive” selling of the peso-dollar pair.

Dollars that exchanged hands yesterday reached $973.8 million, nearly double the $563.8 million traded on Thursday. The second trader said the Bangko Sentral ng Pilipinas (BSP) likely intervened during Friday’s session to “smooth out” currency swings and provide liquidity, although the other trader said the bigger volume was all market. – Melissa Luz T. Lopez

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