Peso weakens on US tax reform
THE PESO traded weaker against the dollar on Monday on the back of the passage of the US tax plan.
The local unit finished at P50.665 against the greenback on Monday, weaker by 29.5 centavos than its P50.37-per-dollar close on Friday.
The peso opened slightly weaker at P50.40, which was also its best showing for the day. The peso’s intraday low, meanwhile, stood at P50.67 against the greenback.
Dollars traded surged to $723.4 million yesterday from the $444.7-million volume logged the previous session.
Traders cited the passage of the tax cut bill in the US Senate as the main driver for the strengthening of the greenback.
“The dollar traded higher… due to the tax reform. The Senate voted for the implementation of the tax plan,” a trader said over the phone.
Over the weekend, Senate Republicans approved the bill with a narrow 51-49 result. The proposal slashes corporate taxes to 20% from the current 35%.
The Senate deal moves Republicans and President Donald J. Trump a big step closer to their goal of slashing taxes in what would be the largest change to US taxation since the 1980s.
Ruben Carlo O. Asuncion, chief economist of UnionBank of the Philippines, noted that investors weighed the positive impact of the corporate tax change.
Mr. Asuncion added that upbeat sentiment on the US tax plan overshadowed the investigation into the connection of then US presidential candidate Mr. Trump and Russia.
Last week, former national security adviser Michael T. Flynn said he was willing to testify regarding Mr. Trump’s connection in the alleged Russian meddling on the 2016 elections.
Meanwhile, another trader pointed out that some players took profits due to the peso’s rally in the past trading days.
“We’ve been seeing a significant improvement in the peso lately so given the move today, we saw a squeeze and thus we saw the dollar-peso to trade near the [intraday low],” the trader said.
For today, traders are expecting the peso to move between P50.50 and P50.80, while Mr. Asuncion gave a wider range of P50.50 to P51 as he noted that the tax cut passage would be [Mr. Trump’s] first potential legislative victory since coming into office.
“With this move, we’re going to see consolidation as I think more players would want to wait and see whether [the dollar