THE PESO strengthened on Wednesday as safe-haven demand for the dollar declined even as trade tensions between the United States and China escalated further.
The local unit ended Wednesday’s session at P53.99 versus the greenback, eight centavos stronger than the P54.07-per-dollar finish last Tuesday.
The peso opened the session slightly stronger at P54.05 versus the dollar. It strengthened to as high as P53.97 intraday, while its worst showing stood at P54.11 per US currency.
Trading volume slid to $657.7 million from the $766.45 million that switched hands the previous day.
A foreign exchange trader said the peso traded stronger in the morning session as the dollar index weakened.
“When we saw some offshore selling, the dollar-peso continued to trade [stronger] until it closed at P53.99,” the trader said in an e-mail.
Washington and Beijing plunged deeper into a trade war after US President Donald J. Trump imposed tariffs on $200 billion worth of Chinese goods. China retaliated with levies on about $60 billion worth of American goods, Reuters reported.
Rather than an outright 25% tariff, the new duties set by the US were at 10% for now before its full implementation by the end of 2018.
“The peso gained some strength amid news of US imposing less tariff rates on Chinese goods…which has driven off some safe-haven demand on the dollar,” another trader said in an e-mail.
The first trader added that the trade spat between the world’s two largest economies has already been priced in by the market.
“I think the market already absorbed the trade tension so the dollar was quite flat. In other words, we did not see any drastic move for the [dollar] index,” the trader said.
For Thursday, the first trader expects the peso to move between P53.85 and P54.05 against the dollar, while the other gave a P53.90-P54.10 forecast range.
“The peso might further appreciate [today] in anticipation of strong monetary action from the [Bangko Sentral ng Pilipinas] next week,” the second trader noted. — K.A.N. Vidal