Peso strengthens after Trump health care defeat
THE PESO started the week stronger against the dollar amid negative market sentiment as investors express doubt US President Donald J. Trump would be able to advance his economic agenda.
The local currency closed at P50.12 versus the greenback on Monday, 20.5 centavos higher from its P50.325 per dollar close during Friday’s session.
The peso opened the session stronger at P50.24 versus the foreign currency, while its intraday trough was at P50.25 per dollar. The local currency’s best showing for the day was just at P50.11 against the greenback. Dollars traded on Monday slipped to $ 497.2 million from the $ 589.4 million that changed hands the previous session. Traders said the dollar dropped against the peso yesterday mainly on the back of Mr. Trump’s failure to gain enough support for his flagship health care reform bill, one of his major campaign promises.
“The peso appreciated today after the Trump administration failed to pass its health care bill. This defeat also fuelled concerns of a delay in President Trump’s promised fiscal stimulus,” one trader said in an e- mail yesterday. Reuters reported Republican leaders on Friday pulled legislation to overhaul the US health care system, after a rebellion by Republican moderates and the party’s most conservative lawmakers left them short of votes. Reuters said the health care failure called into question not only Mr. Trump’s ability to get other key parts of his agenda, including tax cuts and a boost in infrastructure spending, through Congress, but the Republican Party’s capacity to govern effectively.
“Weak US data on services, manufacturing and core durable goods orders also contributed to the peso’s strength against the dollar,” the trader said. On a similar note, another trader said in a phone interview: “The dollar opened weaker yesterday because of the postponement vote in Congress on the health care reform bill.” “The dollar’s weakness caused some people doubting if Mr. Trump’s agenda will be easy to push, particularly the fiscal stimulus he was planning that cast a bit of a doubt,” the trader added. The trader also said overall, the dollar was weaker across a basket of currencies. Reuters reported that the dollar hit a four-month low yesterday.For Tuesday, one trader said peso may play between P50 and P50.20-tothe-dollar, while the other trader said the pair may trade within the P50.05 to P50.25 range. “The peso might remain relatively strong due to political concerns in the US,” one trader noted. —