THE PESO depreciated against the dollar on Thursday due to corporate demand following the “favorable” agreement between the United States and the European Union on trade policies.
The peso closed the session at P53.435 versus the greenback, 6.5 centavos weaker than the P53.37 finish the previous day.
The peso immediately strengthened as it opened the session at P53.29 per dollar. It climbed to its intraday high of P53.27 before declining to its worst showing of the day which stood at P53.455 against the US currency.
Dollars traded grew to $625.4 million from the $557.1 million that switched hands the previous day.
A foreign currency trader said that the peso closed weaker versus the greenback following a reversal in the afternoon session.
“We saw a reversal in the afternoon session due to corporate demand,” the trader said in a phone interview on Thursday.
The trader added the pair initially mimicked the weakness of the dollar in the morning trading, opening the session stronger.
Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, said the greenback edged higher “on the possible trade war aversion between Europe and the US after reaching a favorable deal.”
Reuters, citing the Wall Street Journal, reported that US President Donald J. Trump has secured a concession from the EU to avoid a trade war.
European Commission President Jean-Claude Juncker and EU trade official Cecilia Malmstrom agreed to work with the US to lower industrial tariffs on both sides, increasing American exports.
On Tuesday, the Trump administration said it will pay up to $12 billion to subdue the effects of the trade war on American farmers.
Meanwhile, another trader said the local unit depreciated as investors took advantage of the weaker dollar ahead of likely stronger US gross domestic product data to be released.
On Friday, Mr. Asuncion expects the peso to move between P53.30 and P53.50 versus the dollar, while the second trader gave a P53.35-P53.55 range.
On the other hand, most Asian currencies strengthened on Thursday, with the dollar weakening after the presidents of the United States and the European Commission agreed to lower trade barriers, alleviating immediate concerns about worsening global trade relations.
Investors were also eyeing the European Central Bank’s (ECB) policy statement due later on Thursday for any references to the pace of monetary policy normalization.
Among regional currencies, South Korea’s won led the gains, strengthening 0.5% against its US peer while the Indian rupee strengthened for a second straight session, gaining as much as 0.13% on improving risk sentiment.
Taiwan’s dollar firmed 0.2%, Singapore’s dollar weakened 0.3% while the Thai baht traded flat. — K.A.N. Vidal with Reuters