Peso slides on renewed trade war fears

The peso slid against the dollar anew on Wednesday as investors were still wary about the trade tension overseas amid the decision of the local central bank to raise its interest rates.
The local currency ended Wednesday’s session at P53.48 against the greenback, four centavos weaker than the P53.44-per-dollar finish on Tuesday.
The peso opened the session stronger at P53.33. It rose to as high as P53.31, while its intraday low stood at its closing rate of P53.48.
Dollars traded declined to $650 million from the $733.7 million tallied the previous day.
Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines said the local unit slid against the dollar on the back of the continued market concerns over the trade spat between the United States and China.
In a Reuters report, US Presient Donald J. Trump threatened to impose a 10% tariff on $200 billion of Chinese goods, a response to Beijing’s decision to slap Washington with levies on $50 billion worth of US goods.
Meanwhile, a trader noted that the local unit closed “relatively flat” despite being “generally stronger” within the session ahead of the Bangko Sentral ng Pilipinas (BSP) rate decision.
The local monetary unit raised its benchmark rates by 25 basis points effective June 21. BSP Governor Nestor A. Espenilla said the rate-setting Monetary Board decided to hike as inflation expectations “remain elevated” this year.
“We’re also seeing more volatility in the exchange rate, which potentially adds to the dynamics on inflation that we need to be careful about,” Mr. Espenilla said.
Last month, headline inflation accelerated to a fresh five-year high of 4.6% from the 4.5% logged in April. However, this was lower than the 4.9% expected by the market. — Karl Angelo N. Vidal