Peso declines on trade war fears

THE PESO plunged anew against the dollar on Wednesday due to President Donald J. Trump’s statement on the trade talks between Washington and China.

The local unit closed at P52.47 versus the greenback, 27.5 centavos weaker than its P52.195-perdollar finish on Tuesday. This was the peso’s weakest finish in nearly 12 years since July 19, 2006, when it closed at P52.745.

The peso traded weaker the whole day, opening the session at P52.27 against the US currency. It slipped to a P52.48 low, while its best showing stood at P52.26.

Dollars traded declined to $529.9 million from the $750.65 million that switched hands during the previous session.

A trader said that the peso moved lower due to a risk-off sentiment among investors.

“Market currencies are being sold off, including the peso,” the trader said in a phone interview. “The emerging markets’ currencies such as the peso are being sold in favor of haven currencies...”

The trader said the comments of Mr. Trump that its trade talks with China are not going as well as expected caused investors to move to safe haven currencies.

Meanwhile, another trader said the peso depreciated to new lows “on market positioning ahead of likely hawkish Fed (US Federal Reserve) policy meeting minutes.”

For today, the first trader sees the peso to move between P52.15 and P52.50, adding that market players will wait for the minutes of the May meeting of the Federal Reserve’s Federal Open Market Committee.

Meanwhile, the other trader sees the peso to move within the P52.30-P52.60 range.

“The local currency might further depreciate tomorrow as players will likely seek for hawkish cues from the recent policy minutes towards possible future Fed moves for the year,” the second trader noted.