THE PESO strengthened further against the dollar to hit a fresh one-year high amid market optimism driven by positive developments in US-China trade relations.
The local unit closed at P51.05 versus the greenback on Monday, 19 centavos higher than its P51.24-per-dollar finish last Friday.
This was the peso’s best showing in more than a year or since it closed at P50.84 against the dollar on Jan. 26, 2018.
The peso opened Monday’s session at P51.23 per dollar. Its intraday high stood at P51.045 versus the greenback, while its worst showing for the day was at P51.285.
Trading volume climbed to $870.2 million from the $726.79 million that changed hands in the previous session.
“The peso strengthened sharply from optimism after both the US and China agreed to resume trade negotiations during the G20 summit over the weekend,” a trader said in an e-mail.
On the sidelines of the G20 summit in Osaka, Japan on Saturday, US President Donald J. Trump and Chinese President Xi Jinping agreed to resume trade talks after weeks of hurling tariffs against each other’s imports.
Washington said it will cancel a planned 25% tariff on $300 billion worth of Chinese imports and will ease restrictions on American companies to sell to Chinese telecom giant Huawei Technologies Co. Ltd.
Another trader said developments in US-China trade relations triggered an increase in the market’s risk appetite.
“We saw generally stronger peso throughout the day despite dollar’s strength against other currencies such as euro, pound and yen,” the trader added.
The trader also noted that the local unit strengthened further to breaking the resistance level of P51.10 following the remarks of Socioeconomic Planning Secretary Ernesto M. Pernia on the government’s optimistic outlook on the economy.
For today, the first trader expects the peso to trade between P50.95 and P51.15, while the other gave a P51-P51.20 range.
“However, the local currency might weaken on expectations of upbeat US manufacturing data overnight,” the first trader noted.
The trade truce between the United States and China prompted a relief rally among most other Asian currencies on Monday, with the Chinese yuan and Thai baht leading the gains.
“Investors (have) heaved a massive, but exhausted, sigh of relief that both the US and China opted to push the reset button and restart trade negotiations amidst other pleasantries — now we’ll have to see, whether it all sticks,” Stephen Innes, managing partner at Vanguard Markets Pte Ltd said.
The last major round of Sino-US trade talks collapsed in May, rattling financial markets and renewing concerns the standoff between the two biggest economies could trigger a global recession.
The weekend trade truce sent the yuan to its highest level since June 21.
The relief in markets following the weekend Trump-Xi meeting was underscored by the broadening global impact of the Sino-US trade war.
Private surveys showed factory activity in South Korea and China shrinking, hurt by slowing global trade. — KANV with Reuters