Peso weakens as China warns US of action on Hong Kong bill

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THE PESO depreciated anew on Friday as China threatened to impose countermeasures after the US passed a bill in support of Hong Kong.

The local unit closed at P50.81 versus the greenback on Friday, weakening by 10.5 centavos from the P50.705-a-dollar finish on Thursday, according to data from the Bankers Association of the Philippines.

Week-on-week, the peso also dropped by a centavo from its P50.80 close on Nov. 22.

The peso opened at P50.70 against the dollar. Its weakest point for the day was at P50.89, while its intraday best was at P50.69 versus the greenback.

Dollars traded grew to $1.108 billion from the $1.045 billion seen on Thursday.

Traders attributed the local unit’s weakness to the market’s worries on developments in the US-China trade conflict as well as local economic data.

“There’s this risk-off deadline involving Huawei,” a trader said in a phone call, referring to the government’s outstanding debt.

Meanwhile, another trader said woes arose from the passage of the US law supportive of Hong Kong’s autonomy.

“The peso weakened significantly amid fears of further delay in the US-China trade discussions following US President [Donald J.] Trump’s signing of the Hong Kong Democracy Act,” the trader said in an email.

Reuters cited a Wall Street Journal report that Huawei Technologies Co., Ltd. challenged a US Federal Communications Commission (FCC) decision that did not allow US rural carrier customers from utilising an $8.5 billion government fund to buy equipment from the Chinese firm.

Citing people familiar with the matter, the Wall Street Journal reported that Huawei is expected to file a suit to challenge the said FCC decision next week.

“We don’t comment on speculation,” Huawei spokesman in Shenzhen told Reuters.

Meanwhile, China has denounced the signing of the legislation that backed protesters and threaten China with possible sanctions on human rights. China’s Foreign Ministry warned of “firm counter measures” on Thursday.

The “Hong Kong Human Rights and Democracy Act” that Trump signed requires the State Department to certify at least once a year that Hong Kong retains enough autonomy to justify the favorable US trading terms that have helped it maintain its position as a world financial center. — L.W.T. Noble with Reuters