Peso strengthens on progress in US-China talks
THE PESO appreciated further on Friday on the back of market optimism that a phase one deal with China was already approved by the United States.
The local unit finished trading at P50.64 against the greenback on Friday, strengthening by 7.1 centavos from its 50.711 close on Thursday, according to data from the Bankers Association of the Philippines.
The peso opened at P50.50 per dollar. Its weakest showing was at P50.645 and it climbed to as high as P50.46 a dollar.
Dollars traded rose to $1.327 billion on Friday from the $794.1 million seen on Thursday.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort and a trader attributed the peso’s strength to the positive developments from the trade negotiations between the world’s two biggest economies.
“The local currency strengthened from upbeat market sentiment after US President [Donald] Trump already agreed in principle on a first phase trade deal with China and the landslide win of incumbent British Prime Minister Boris Johnson win in the UK elections,” a trader said in an email.
“The peso closed stronger after US President Trump signed off the phase one US-China trade deal…thereby improving global market risk appetite especially on some emerging market stock markets and currency markets, such as the peso,” Mr. Ricafort said in a text message.
Reuters reported that a source knowledgeable on the bilateral negotiations of US and China said the former will suspend tariffs on $160 billion worth of Chinese goods expected to take effect by Sunday and roll back existing tariffs.
Additionally, the source said Beijing accepted buying $50 billion worth of agricultural goods from the US in 2020 which is twice what it bought in 2017 when the trade war has yet to start.
Two people familiar with the negotiations had said earlier on Thursday that Washington offered to cut existing tariffs on Chinese goods by as much as 50% and suspend the new tariffs scheduled for Sunday in order to secure a “Phase 1” deal first promised in October. — L.W.T. Noble with Reuters
