THE PESO will likely strengthen on Monday, with the dollar seen to depreciate as risk appetite improves following positive developments in the trade relations between the United States and China.
The local unit closed at P53.425 versus the greenback on Friday, a tad stronger than the P53.44-per-dollar finish on Thursday, as the announcement of trade talks between US and China encouraged some risk-on sentiment in the market.
Week on week, the peso declined from its P53.135-per-dollar finish on Aug. 10.
Guian Angelo S. Dumalagan, Land Bank of the Philippines market economist, said the dollar could trim some of its gains on Monday.
“The dollar may initially depreciate on Monday following news last week that the US and China are intent to settle disagreements over trade before planned meetings in November 2018,” Mr. Dumalagan said in an e-mail on Saturday.
Reuters reported on Friday that Beijing and Washington will hold lower-level talks this month, offering hope of a possible resolution to the escalating trade war.
The talks in Washington will take place on Aug. 21-22, just before new tariffs on Chinese goods as well as retaliatory levies on US products take effect.
This will pave the way for a bilateral talk between Chinese President Xi Jinping and his US counterpart Donald J. Trump in the G20 Summit in Argentina in November.
“The improvement in risk appetite as a result of this positive development may reduce the dollar’s appeal, reinforcing the impact of last Friday’s weaker-than-expected US consumer sentiment,” Mr. Dumalagan said.
He added that the dollar’s decline might be tempered by “lingering concerns about the Turkish lira.”
Last week, Mr. Trump threatened to impose more sanctions on Turkey if Ankara does not release Andrew Brunson, a pastor accused of participating in a failed coup two years ago.
“We will pay nothing for the release of an innocent man, but we are cutting back on Turkey!” Mr. Trump said in a tweet early Friday.
“I’m looking at how the trade negotiations between US and China if something starts…” UnionBank of the Philippines chief economist Ruben Carlo O. Asuncion said in a text message on Friday.
He added that the peso might move sideways today ahead of the non-working holiday on Tuesday.
Local financial markets are closed on Tuesday in observance of Ninoy Aquino Day and Eid al-Adha.
For Monday, Mr. Asuncion said the peso will move between P53.20 and P53.50 versus the dollar, while a foreign exchange trader gave a P53.25-P53.45 range.
On the other hand, Mr. Dumalagan expects the pair to trade between P52.80 and P53.60 this week. — Karl Angelo N. Vidal

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