THE PESO moved sideways on Tuesday after the US government granted a 90-day extension for Chinese telecommunications firm Huawei Technologies Co., Ltd. to buy US-made components to service its existing customers.
The local unit closed at P52.29 against the greenback on Tuesday, two centavos higher than Monday’s P52.31-per-dollar finish.
The peso opened the trading session at P52.37 against the greenback. It closed at its intraday high, while its worst showing for the day was recorded at P52.45 a dollar.
Dollars traded during the session climbed to $1.129 billion on Tuesday from $1.069 billion the previous day.
A trader interviewed via phone said the Huawei ban extension contributed to risk-on sentiment in Asian currencies, which includes the Philippine peso, “that’s why the market players opted to take profit” on Tuesday.
The peso strengthened on “positive developments in US-China trade talks and after Pres. Trump granted a new 90-day extension for the lifting of the Huawei ban,” another currency trader said via e-mail.
The United States will extend on Thursday a reprieve that permits China’s Huawei Technologies to buy components from US companies to supply existing customers, the Commerce Department said on Monday, but it also moved to add more than 40 of Huawei’s units to its economic blacklist.
The 90-day extension “is intended to afford consumers across America the necessary time to transition away from Huawei equipment, given the persistent national security and foreign policy threat,” the department said in a statement.
The US government blacklisted Huawei in May, alleging the Chinese company is involved in activities contrary to US national security or foreign policy interests.
Local financial markets are closed today in observance of Ninoy Aquino Day.
Meanwhile, most emerging Asian currencies declined on Tuesday, as the dollar firmed on hopes for fresh stimulus from global policy makers while the yuan, a bellwether for regional peers, weakened.
Investors widely expect the US Federal Reserve to cut rates again in September. The market’s focus will be Fed Chair Jerome Powell’s remarks at the annual symposium of global central bankers starting on Friday at Jackson Hole, Wyoming.
The Chinese yuan declined as much as 0.3%, touching a one-week low, before paring some of the loss.
OCBC said in a note that for Asian currencies, recovery of risk sentiment was offset by a weaker yuan in the wake of regulatory changes at China’s central bank. — M.T. Amoguis with Reuters