THE PESO regained some strength against the dollar on Tuesday on the back of stronger remittances in April.
The local unit closed at P53.44 against the dollar on Wednesday, four centavos stronger than the P53.48-per-dollar finish on Monday.
The peso bounced back immediately as it opened the session at P53.39 versus the greenback. It rose to as high as P53.31, while its intraday low was at P53.49 a dollar.
Dollars traded surged to $733.7 million from the $568 million that switched hands the previous day.
A trader attributed the rebound of the local currency to the remittances report released Monday.
“The peso slightly appreciated following the release of strong foreign remittances data,” the trader said in an e-mail.
Money sent home by Filipinos overseas amounted to $2.347 billion in April, 12.7% bigger than the $2.083-billion inflows logged in the same period last year, data released by the Bangko Sentral ng Pilipinas (BSP) on Monday showed.
Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, said in a previous interview that there might be a correlation between the peso weakness and remittances.
“The probability that more remittances will flow into the economic system is high when more peso is exchanged for foreign currency, particularly the US dollar,” he said.
However, another trader said the data had little effect on the peso-dollar trading as investors are still concerned over the renewed trade tensions between the United States and China.
“The momentum of a strong dollar was really strong. Although it was a good data, it didn’t affect the peso-dollar that much,” the trader said.
Reuters reported that China accused the US of initiating a trade war, saying it will fight back firmly if Washington publishes an additional list of tariffs on Chinese goods.
“There is still a risk-off sentiment among investors due to the trade tensions between US and China. With that, investors tend to prefer safe-haven currencies over riskier assets,” the second trader said.
“That’s why we saw the US dollar, Japanese yen and Swiss franc moving higher.”
Mr. Asuncion noted in a Tuesday text message that the downward movement of the peso “is expected to be a trend until an easing of the [trade tensions] is seen.”
Meanwhile, BSP Governor Nestor A. Espenilla, Jr. said the monetary authority “is ready to act to prevent excessive peso volatility and overshooting due to speculative activities.”
“The movement of the peso is market-driven. Its medium-term stability is well supported by sound macroeconomic fundamentals,” Mr. Espenilla said in his speech in Tokyo, Japan for the government’s non-deal road show.
For Wednesday, the traders expect the peso to move between P53.30 and P53.50 versus the dollar, while Mr. Asuncion gave a higher P53.40-P53.60 range. — Karl Angelo N. Vidal