Peso drops ahead of trade talks
THE PESO weakened against the dollar on Wednesday as investors continued to monitor trade talks between China and the United States as the local market reopened after a holiday.
The local unit closed on Wednesday at P53.425 versus the greenback, weaker by 4.5 centavos from the P53.38 finish on Monday.
The peso opened the session slightly stronger at P53.36 per dollar, climbing to as high as P53.35 intraday. Its worst showing for the day stood at P54.44 against the US currency.
Dollars traded thinned to $385.15 million yesterday from the $424.35 million that switched hands on Monday.
A foreign exchange trader said the peso weakened against its US counterpart, although it moved within a familiar range during the trading session.
“It weakened a bit, but it’s still within the range. It hovered around the P53.30-P53.55 range,” the trader said in a phone interview.
The trader added that market focus was on the US-China trade discussion this week, with investors hoping for a resolution to the escalating trade spat.
“We are still seeing the risk on the US-China trade talks. It’s still ongoing.”
Low-level talks are taking place this week just before US tariffs on Chinese exports are due to take effect.
However, in a Reuters report, US President Donald J. Trump said he does not expect much progress from the trade talks, adding that resolving the dispute will “take some time.”
“China’s done too well for too long, and they’ve become spoiled. They dealt with people that, frankly, didn’t know what they were doing, to allow us to get into this position,” Mr. Trump said.
The trader added that investors are also looking at the issues in the Turkish economy and whether it have “give negative effects on emerging markets.”
Meanwhile, another trader said the peso depreciated ahead of likely hawkish cues from the August meeting minutes of the US Federal Reserve.
“The minutes might strengthen views of a September rate hike,” the trader said in an e-mail.
For Thursday, the first trader expects the peso to trade between P53.30 and P53.55 versus the dollar, while the other gave a P54.40P53.60 range.
“The local currency is expected to further weaken [on Thursday] as investors might remain towards the dollar ahead of US Federal Reserve chairman Jerome Powell’s speech in Jackson Hole, Wyoming which is expected to provide guidance to the pace of US interest rate normalization,” the second trader noted.
Most Asian currencies traded sideways on Wednesday as investors shied from taking positions ahead of Sino-US trade talks later in the day.
Holidays in the region also kept volumes low. The Indian, Indonesian, Malaysian and Singapore markets were closed. •