Peso inches up on US-China trade deal

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THE PESO ended sideways on Monday as the market awaits clearer details from the “phase one” deal between the US and China and as investors close their books for the year.

The local unit finished trading at P50.635 against the greenback on Monday, almost flat from its P50.64 close on Friday, according to data from the Bankers Association of the Philippines.

The peso opened the session at P50.65 against the dollar. Its weakest showing was at P50.67, while its intraday best was at P50.57 versus the greenback.

Dollars traded sank to $502 million from $1.327 billion on Friday.

A trader attributed the peso’s sideways movement to the market still waiting for clearer details regarding a deal between the world’s two biggest economies which have been in a 17-month long trade siege.

“The peso moved sideways with the market looking for new leads from the phase one deal as the deal is still very vague so they are on the lookout for the bigger picture. Market investors are also already closing their books as we come closer to yearend,” the trader said in a phone call.

Reuters reported that US Trade Representative Robert Lighthizer said on Sunday in an interview with CBS that the “phase one” of the trade deal will nearly multiply US exports to China by a twofold for the next two years.

Mr. Lighthizer also said there would be some routine “scrubs” to the text of the deal but it is “totally done, absolutely.”

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort also said phase one deal helped the peso gain ground.

“Better BoP (balance of payments) and current account data as of the third quarter also supported the peso,” Mr. Ricafort added.

On Friday, data from the Bangko Sentral ng Pilipinas showed the country’s BoP position in the third quarter stood at a surplus of $778 million, a reversal of the $1.9-billion deficit logged in the same period a year ago. The current account reversed to a surplus of $654 million in the third quarter from the $2.081-billion deficit a year ago.

For today, the trader sees the peso trading at P50.50-50.70 against the dollar, while Mr. Ricafort gave a forecast range of P50.50-50.75. — LWTN with Reuters