Peso rebounds ahead of BSP meet, US-China talks

THE PESO recovered against the dollar on Thursday as investors await a possible emergency meeting of the local central bank last night and amid the trade talk offer of the United States to China.
The local unit closed at P54.07 versus the greenback on Thursday, six centavos stronger than Wednesday’s P54.13-per-dollar finish.
The peso traded stronger the whole day, opening the session at P53.99 per dollar. It climbed to as high as P53.935, while its intraday low stood at just P54.09 versus the US currency.
Dollars traded declined to $658.3 million from the $772.5 million that exchanged hands the previous day.
A foreign exchange trader said the peso strengthened against its US counterpart as it traded within a wide range.
“It traded in the same range same as [on Wednesday] since market seems to be anticipating the emergency meeting from the central bank,” the trader said in a phone interview. “We saw some investors taking profits.”
On Friday, the Bangko Sentral ng Pilipinas (BSP) said the Monetary Board may meet ahead of the Sept. 27 policy meeting to address inflation issues. “That’s an option. We’ll see,” BSP Governor Nestor A. Espenilla, Jr. told reporters in a mobile phone message.
Inflation rose to a nine-year high of 6.4% in August due to higher oil and food prices.
Mr. Espenilla said the monetary authority will take “strong immediate action” to dampen threats to prices and inflation expectations.
“The market is anticipating an unscheduled Monetary Board meeting to further address rising inflation and its impact on the local financial market,” UnionBank of the Philippines chief economist Ruben Carlo O. Asuncion said in a text message.
He added that the US dollar “has gained” and there seems to be a possibility of having fresh trade negotiations between the US and China.
Washington invited Beijing to restart trade talks as the US prepares to further escalate their dispute by imposing steep tariffs on Chinese goods, Reuters reported.
White House Economic Council Head Larry Kudlow told Fox Business Network that US Treasury Secretary Steven Mnuchin had sent an invitation to senior Chinese officials.
For Friday, Mr. Asuncion said the peso will likely move between P53.90 and P54.20 versus the dollar, while the trader gave a P53.90-P54.15 range.
“The dollar-peso will trade stronger if there’s a 50-basis point rate hike,” the trader noted.
The Trump administration’s invitation to China for a new round of trade talks supported almost all Asian currencies on Thursday, raising some optimism that a deal could avoid tariffs and defuse US-China tensions.
Sino-US trade tensions have hammered riskier assets globally in recent months as policy makers and investors worried about the impact of trade disruptions on the world economy. — K.A.N. Vidal with Reuters