THE peso firmed against the US dollar on Thursday, amid market expectations of a policy rate cut.

The local unit ended at P52.11 against the greenback on Thursday, appreciating by 10 centavos from its P52.211-to-a-dollar close on Wednesday.

The peso opened at P52.22 versus the dollar. It traded in a tight range, with its weakest point recorded at P52.24, while its intraday best was at P52.07 against the greenback.

Dollars traded on Thursday stretched to $1.147 billion compared to the $1.041 billion tracked on Wednesday.

“The peso strengthened from market optimism after US President [Donald J.] Trump commented that a trade deal with China is more likely to come sooner than market expectations,” a trader said.

“Market sentiment also improved after [Mr.] Trump cited progress on trade talks with Japan, which eased access for the purchase of more US agricultural products,” Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said.

For today, the trader sees the peso to trade between P52.05-P52.25.

Meanwhile, most Asian currencies inched higher on Thursday, with investors cautiously optimistic after US President Donald Trump hinted the United States and China could resolve their trade differences soon.

Mr. Trump said that a trade deal with China could happen sooner than people think saying the two biggest economies are having “good conversations.” The president’s recent remarks come after he delivered a stinging rebuke to China’s trade practices and said he would not accept a “bad deal.”

While Mr. Trump’s comments helped sentiment, Asian currencies traded in a thin range as investors remained apprehensive.

“Considering the fact that a rapid deterioration in US-China relations is not without precedence, investors will continue scouring the horizon for any signals that can push risk sentiment either way,” Han Tan, market analyst at FXTM, said in a note.

Meanwhile, the Thai baht slipped 0.3% to 30.590. The Bank of Thailand left benchmark interest rates unchanged on Wednesday but cut its 2019 economic growth forecast to 2.8% from 3.3% seen in June, and forecast exports will shrink this year.

The economy has been plagued by below-target inflation, risks to financial stability and sagging growth alongside a strengthening baht, which has led policy makers to roll out stimulus measures to shore up growth.

In Malaysia, the focus is on the FTSE Russell’s decision later in the day on whether it will keep Malaysian government bonds on its global bond index. The ringgit slipped 0.1% against the dollar ahead of the announcement.

The review was initiated due to concerns about market liquidity.

“Hopes are pinned on the liquidity boosting measures by the BNM to satisfy the index provider,” Prakash Sakpal an economist, at ING wrote in a note.

Southeast Asia’s third-largest economy loosened currency hedging rules in August to help boost liquidity.

In April, a Morgan Stanley research note said that the country would see outflows of $8 billion if its bonds are downgraded after the review.

Malaysia’s current weight in the index is 0.39%. — Reuters with report from LWTN

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