THE PESO strengthened slightly against the dollar on Monday as markets await the minutes of the latest meeting of the US Federal Reserve and trade talks between Washington and Beijing.
The local unit ended the session on Monday at P53.38 versus the greenback, 4.5 centavos stronger than the P53.425-per-dollar finish on Friday.
The peso traded stronger the whole day, opening the session at P53.38 versus the dollar. It climbed to as high as P53.37 intraday, while its worst showing for the day stood at P53.41 against the greenback.
Dollars traded declined to $424.35 million during yesterday’s session from the $581.88 million that switched hands last Friday.
On Monday, a foreign currency trader said the peso moved sideways as the market awaits “light data” to be released this week.
“Investors will likely to monitor possible hawkish cues from the August Fed meeting minutes scheduled to be released on early Wednesday, which might point towards a possible rate hike in September,” another trader said in an e-mail.
The US central bank’s Federal Open Market Committee opted to leave policy rates unchanged at its July 31-Aug. 1 meeting. However, the Fed is widely expected to tighten its benchmark rates next month.
Meanwhile, the second trader added the peso still closed stronger on the back of “continued optimism” on the trade talks between China and the United States despite the less volatile trade ahead of the holiday on Tuesday.
“There’s more of remittance that pushed the peso stronger intraday but at the same time there’s some buying level as the currency market was quite range trading for the day,” the first trader noted.
Local financial markets are closed on Tuesday in observance of Ninoy Aquino Day and Eid al-Adha.
Most Asian currencies started the week on a high note after news of impending lower-level trade talks between the United States and China returned risk appetite to regional markets.
The greenback was flat on Monday after slipping about 0.6% on Friday, as investors exited the safe-haven currency.
“China and US restarting trade talks, no matter how tentative they are, will undoubtedly be a positive development for risk appetite. Even if nothing conclusive may be achieved this week, at minimum there could be an implicit promise of a ceasefire with no escalation in the interim,” Mizuho Bank said in a note.
Low-level Sino-US talks are expected later this week, the two governments had said. Reports suggested the talks in Washington would take place on Aug. 21 and 22, just before US tariffs on Chinese exports are due to take effect.
In Asia, emerging market currencies recovered from a widespread sell-off last week, brushing off the fallout from the collapse in Turkey’s lira. — K.A.N. Vidal with Reuters