Peso rebounds on safe-haven buying
THE PESO rebounded against the dollar on Tuesday, driven by safe-haven buying as market players remained cautious ahead of British Prime Minister Theresa May’s speech later on Tuesday, and US President-elect Donald J. Trump’s inauguration on Friday.
The peso ended at P49.83 versus the greenback on Tuesday, three centavos higher compared to its finish of P49.86 on Monday’s session.
The local unit opened the session at P49.97 against the greenback. Its intraday low was at P49.985 per dollar, while its peak for the day was booked at P49.825.
Dollars traded on Tuesday totalled $ 732.3 million, climbing from the $ 464.1 million that changed hands in the previous session.
“The peso appreciated slightly today due to day-end profit taking. However, it initially weakened in the morning session due to safe- haven buying amid political concerns abroad,” a trader said in an e-mail yesterday.
“Investors were cautious ahead of the US presidential inauguration and the speech of British Prime Minister Theresa May,” the trader added.
Mr. Trump will be inaugurated as the new US President on Jan. 20. Analysts and economists have attributed negative market sentiment seen recently to Mr. Trump, especially after the he failed to provide details on his planned policies during a news conference last week.
Markets were also wary over a “hard” Brexit as Ms. May was scheduled to give a speech later on Tuesday. Excerpts from her speech released in advance to media showed Ms. May will give further signals that she favors a clean break from the European Union, in what analysts call a “hard” Brexit.”
“Not partial membership of the European Union, associate membership of the European Union, or anything that leaves us half-in, half-out,” Ms. May is due to say on Tuesday, AFP reported.
Meanwhile, another trader said in a phone interview that the peso’s increase was “due to a generally weaker dollar across the board.”
For today, one trader said the pair may move within the P49.75 to P49.95 range, while the other trader said the peso may trade at P49.70 to P49.90 per dollar.
“The peso might depreciate anew, as the British prime minister’s comments about Brexit might fuel safe- haven buying. Bets of strong US inflation in December 2016 might also weaken the peso by supporting views of at most three US rate hikes this year,” one trader noted.
Markets are anticipating up to two to three interest rate hikes by the US Federal Reserve amid threats of US inflation spiking up driven by Mr. Trump’s fiscal policies of aggressively spending on infrastructure projects and trimming taxes. —