THE PESO regained its strength versus the dollar on Thursday as markets picked up a sense of optimism that trade talks between the US and China are still in progress despite the situation in some of China’s territories and following data showing manageable inflation in November.
The local unit closed at P50.80 against the greenback on Thursday, strengthening by 22 centavos from the P51.02-a-dollar close on Wednesday, according to data from the Bankers Association of the Philippines.
The peso opened at P50.95 against the dollar. Its weakest point was at P50.95 while its strongest was at P50.78 versus the greenback.
Dollars traded dropped to $1.022 billion from $1.428 billion seen on Wednesday.
The peso’s rebound on Thursday came after positive leads about the US-China trade talks, according to one trader.
“The peso appreciated sharply from renewed market optimism amid news that the US and China resumed negotiations despite geopolitical noise involving Hong Kong and the Uighurs,” the trader said in an e-mail.
Reuters reported that Chinese ambassador to the United States Cui Tiankai said the world’s two biggest economic powerhouses have been working to resolve their differences over trade.
However, he warned of “forces” that may be a source of conflict between the two countries.
Mr. Cui urged US and Chinese companies keen to expand trade between the two countries to stand up against what he called efforts to “spread hostility and even create conflict between us,” as well as “fake news” about the situations in both Hong Kong and Xinjiang, China’s troubled western region that is home to a large Uighur Muslim minority, whom some US officials have said are the victims of human rights abuses.
The House of Representatives in the US voted nearly unanimously on Tuesday for a bill that would require the administration to toughen its response to China’s crackdown on the Uighurs.
Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the peso’s movement to the November inflation report.
“Latest inflation data [is] still considered relatively low despite some uptick from unusually low levels, thereby supporting the sentiment on the peso,” he said in a text message.
November inflation was seen at 1.3%, according to data from the Philippine Statistics Authority. This is a pickup from the 0.8% rise in the overall prices of commodities in October.
For today, the trader sees the local unit moving within the P50.70-50.90 range, while Mr. Ricafort gave a forecast of P50.65-50.95. — LWTN with Reuters