THE PESO weakened on Wednesday amid risk-off sentiment in the market due to the US signaling it will only consider further reductions in Chinese tariffs after the elections in November.
The local unit finished trading at P50.715 versus the dollar, depreciating by 13.40 centavos from its Tuesday close of P50.581 against the greenback.
The peso opened the session at P50.68 to a dollar. Its weakest point for the day was at P50.755, while its intraday best was at P50.63 against the greenback.
Dollars traded thinned to $1.25 billion yesterday from $1.408 billion seen on Tuesday.
A trader and an analyst said the peso declined due to risk-off sentiment following new developments in the US-China trade war.
“The peso weakened after the US said that no further reduction in Chinese tariffs will be implemented until the November US elections. This statement has partly reduced market optimism amid this week’s signing of the phase one US-China trade deal,” the trader said in an e-mail.
“The peso exchange rate closed at its weakest in a week after the [US President Donald J.] Trump administration signaled that existing tariffs on US imports would remain could be reduced [only] after the US elections, depending on China’s compliance with the phase one deal,” said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.
Reuters reported US Trade Representative Robert Lighthizer and US Treasury Secretary Steve Mnuchin moved to stamp out suggestions that Washington and Beijing may study the possible removal of more tariffs after the elections in November. They issued a joint statement saying there were no written or oral agreements on future tariff cuts.
For today, the trader gave a forecast range of P50.65 to P50.85, while Mr. Ricafort sees the peso playing around the P50.50-50.80 levels. — L.W.T. Noble with Reuters