Peso extends climb against dollar
THE PESO extended its climb against the dollar on Wednesday as the market continued to cheer the enactment of the government’s tax reform package amid delays in the US’ own plans to amend levies.
The local currency ended the session at P50.29 versus the greenback yesterday, up ten centavos from its P50.39-per-dollar finish on Tuesday.
The peso opened the session stronger at P50.25 against the dollar, which was its best showing for the day. Yesterday’s intraday low stood at P50.34 versus the greenback.
Dollars traded, however, slid to $490.8 million from the $604.7 million that changed hands in the previous session.
Traders interviewed on Wednesday said the peso’s strength was still attributable to the signing of the tax reform program’s first tranche.
“[ Yesterday], we saw the peso appreciate — this is still connected to the [passage of the] TRAIN ( Tax Reform for Acceleration and Inclusion) bill,” Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, said over the phone.
On Tuesday, President Rodrigo R. Duterte signed the TRAIN bill, which provided tax cuts and exemptions for personal income and slapped higher levies on commodities such as fuel, sweetened beverages, among others.
Mr. Asuncion noted that while the passage of the local tax reform was the main driver of yesterday’s trading, delays in the US’ own tax plan also boosted the peso.
“The peso appreciated today amid further delays from the US House in passing the US tax reform bill,” another trader said in an email on Wednesday, adding that they are expecting the Republican tax bill to be signed by US President Donald J. Trump on Sunday.
Initially, the measure received a 227-203 vote in the House early Tuesday.
Once signed, the new American tax structure will slash tax rates for corporations and reorganize individual taxes.
For today, Mr. Asuncion expects the peso to trade within the P50.10 to P50.50 level, while the trader gave a slimmer range of P50.15 and P50.45.
“The local currency might slightly weaken [ today] against the dollar ahead of likely higher third quarter year- on-year US gross domestic product ( GDP) growth,” the trader said.
Meanwhile, most Asian currencies were tepid on Wednesday with the baht staying under pressure ahead of the Bank of Thailand’s policy review where it is expected to keep rates near record lows.