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Peso plunges on Trump remarks

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THE PESO plunged against the dollar on Tuesday as market players shied from riskier currencies after US President Donald J. Trump threatened to impose tariffs against Chinese goods anew.

The local unit ended yesterday’s session at P52.605 versus the greenback, 25.5 centavos weaker than the P52.35-per-dollar finish last Monday.

The peso traded weaker the whole day, opening the session at P52.52 versus the dollar. It dropped to as low as P52.62, while its intraday high stood at P52.43 against the greenback.

Trading volume spiked to $1.07 billion from the $755.4 million that exchanged hands the previous day.

Traders said the peso sharply declined against the dollar yesterday amid risk-off sentiment following the statement of Mr. Trump.

“The peso depreciated on renewed risk-off sentiment after President Trump threatened new tariffs on China, which are expected to affect the supply chains of major American companies such as Apple, Inc.,” a trader said in an e-mail.

In an interview with the Wall Street Journal published Monday, the American leader said it was “highly unlikely” he would accept Beijing’s offer to postpone the 25% levies on Chinese goods by next year. He mentioned he could also impose tariffs on Apple products such as mobile phones and laptops manufactured in China.

“US dollar was also higher versus major currencies after US President Trump signaled possible bigger trade war with China…,” Michael L. Ricafort, economist at Rizal Commercial Banking Corp., said in a text message, adding that expectations of another rate hike from the US Federal Reserve also boosted the greenback’s strength.

Mr. Ricafort said the peso also corrected following the wider fiscal gap released on Monday.

For today, two traders expect the peso to trade between P52.50 and P52.70 versus the dollar. — K.A.N. Vidal