Peso strengthens on US protectionism worries

THE PESO strengthened against the US currency on Thursday as the dollar slumped due to concerns over the United States government’s protectionist trade policies, and ahead of the European Central Bank ( ECB) decision on its interest rates.

The local currency ended Thursday’s session at P50.81 versus the greenback, 15 centavos stronger than its P50.96- perdollar close on Wednesday.

The peso traded stronger the whole day, opening the session at P50.86 versus the dollar, while its intraday high stood at P50.72. The peso’s worst showing, meanwhile, landed at P50.91 against the US currency.

Dollars traded soared to $1.05 billion from the $791.45 million that changed hands in the previous session.

“The US dollar has declined because of the recent protectionist policy from the US,” Ruben Carlo O. Asuncion, chief economist of UnionBank of the Philippines, said in a mobile phone message on Thursday.

On Tuesday, President Donald J. Trump imposed tariffs on imported solar panels and washing machines in support of the American manufacturers.

A trader said the dollar’s weakness across the board prompted the dollar-peso trading to follow suit.

“It was a volatile session as we continue to see funds selling dollar aggressively,” the trader said.

Meanwhile, Mr. Asuncion added that US officials’ comments welcoming a weaker dollar added to the downward pressure.

On Wednesday, US Treasury Secretary Steven T. Mnuchin was quoted by Reuters as saying: “Obviously a weaker dollar is good for us as it relates to trade and opportunities.”

Another trader added the peso continued to gain strength as investors took profits ahead of the ECB interest rate decision on Thursday.

“The markets are likely to take cues on possible hawkish indications from the ECB as economic data shown constant growth within the Euro area, which might put some downward pressure towards the dollar,” the trader said in an e-mail.

For today, the first trader said the peso might move between P50.65 and P50.90, while the other trader gave a slightly slimmer range of P50.60 to P50.90.

“[T]he local currency will continue to appreciate following the ECB rate decision and amid likely softer initial GDP ( gross domestic product) growth data from the US,” the second trader noted. –