THE PESO continued its rally against the dollar on Wednesday amid market caution over developments in the US.
The local currency closed at P50.62 against the greenback yesterday, gaining 12 centavos from Tuesday’s P50.74-per-dollar finish.
This is the peso’s best finish in more than three months or since Aug. 9’s P50.575-per-dollar close.
The peso opened the session stronger at P50.61 and registered an intraday high of P50.575. Yesterday’s low, meanwhile, stood at P50.67 versus the greenback.
Dollars traded slid to $533 million from Tuesday’s $584.9 million.
Traders interviewed said the stronger peso is in line with the movement of Asian currencies as the fifth round of talks on the North American Free Trade Agreement (NAFTA) yielded little results.
“The market traded lower [yesterday], I think overnight there’s a news regarding NAFTA, triggering the dollar to weaken,” a trader said over the phone.
While NAFTA’s fifth set of talks saw some progress in some technical terms, the more controversial issues such as the intention of the US to terminate the trade deal easily was met with opposition from Mexico and Canada.
“The peso continued to appreciate [yesterday] amid inflation and policy uncertainties, which weighed on the US yields. There was also caution ahead of the FOMC minutes,” Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines, said in an e-mail.
“I don’t see any bad news that will make the peso weak,” another trader said. “Especially that Thursday and Friday are remittance days so we’re going to see a lot of selling.”
Traders said the peso will likely trade between P50.45 and P50.90 versus the dollar today, as Mr. Dumalagan noted that “[t]he dollar might recover due to likely hawkish FOMC minutes, which keep open the chances of another US rate hike this December.” — K.A.N. Vidal
