THE PESO plunged against the dollar on Thursday propelled by optimism on the US-China trade negotiations.
The local unit closed Thursday’s session at P52.38 versus the greenback, 25 centavos weaker than the P52.13-per-dollar finish last Wednesday.
The peso traded weaker the whole day, opening the session at P52.24 against the greenback. It declined to as low as P52.39, while its best showing stood at P52.185 per dollar.
Trading volume thinned slightly to $1.097 billion from the $1.098 that switched hands the previous day.
“For the past few days, the peso-dollar movement was quite hard to predict. I’m not sure if there’s demand for the dollar, but it looks like many are trying to break the resistance levels,” a foreign exchange trader said in a phone interview.
The trader added that the dollar was strong overnight due to a slew of factors, including the weak euro as well as market optimism to political developments in the US such as its trade talks with China.
In a report from Reuters, US Treasury Secretary Steven Mnuchin said he was looking forward to the three-day deputy-level meetings in Beijing as it moved to a higher level in attempts to de-escalate a tariff war ahead of the March 1 deadline.
American tariffs on $200 billion worth of Chinese goods is scheduled to be increased to 25% from 10% if no deal was reached within the 90-day truce.
Meanwhile, President Donald J. Trump is set to sign a border security deal to avoid another partial government shutdown.
Last month, Mr. Trump decided to end a 35-day state shutdown, the longest to date, without securing funding to his proposed southern border wall.
“Combining all these factors, it led to a stronger dollar against major currencies and the peso as well,” the trader added.
Meanwhile, another trader said the peso depreciated after the US inflation report came out stronger than expected.
The US consumer price index grew 1.6% year-on-year in January, the slowest since June 2017 and the 1.9% annual pace in December.
“The markets focused to the unchanged core inflation data both on an annual and monthly basis, which eased off some dovish expectations that the US economy might be starting to show signs of slowdown as have been observed in other developed economies,” the other trader said in an e-mail.
For today, the second trader expects the peso to trade between P52.30 and P52.50, while the other gave a slightly wider P52.30-P52.55 range. — K.A.N. Vidal