THE PESO strengthened further against the dollar to hit a one-year high on Monday following upbeat developments in the United States-China trade talks and amid anticipated remittance flows.
The local unit closed yesterday’s session at P51.64 versus the greenback, 12.5 centavos stronger than Friday’s P51.765 finish.
This was the peso’s best showing in more than a year or since it closed at P51.48 per dollar on Feb. 9, 2018.
The peso opened the session at P51.76 versus the dollar, which was already its worst showing for the day. Meanwhile, its intraday high stood at P51.63 against the US currency.
Trading volume however thinned to $581 million from the $998.4 million that changed hands the previous session.
A foreign exchange trader said the local unit strengthened versus the dollar, continuing the upbeat trading seen last Friday where the peso broke key support levels.
“So far, the volume was very thin due to the shortened work week, but we see still it moving lower given the anticipation of remittance flows,” the trader said in a phone interview.
Meanwhile, another trader said the peso strengthened amid “global risk-on sentiment” following positive developments in the US-China trade negotiations.
Over the weekend, US Treasury Secretary Steven Mnuchin told Washington reporters that the US and China are “hopefully getting very close to the final round of these issues.”
He added that Washington is open to face “repercussions” if it does not fulfill its commitments. “I would expect that the enforcement mechanism works in both directions, that we expect to honor our commitments, and if we don’t, there should be certain repercussions, and the same way in the other direction.”
“The risk-on sentiment helped the peso as well,” the first trader said. “But the thin volume just shows that the market is cautious ahead of the holidays.”
For today, the first trader expects the peso to move between P51.55 and P51.79 versus the dollar, while the other trader gave a P51.50-P51.80 range.
“The local currency might appreciate further on continued foreign remittance inflows this week and ahead of likely mixed US industrial production report,” the second trader noted.
Most Asian currencies also stepped up against the dollar on Monday as investors took comfort in further signs of stabilization in the Chinese economy and an upbeat start to US earnings. — K.A.N. Vidal with Reuters