Peso drops as markets shrug off Trump
THE PESO weakened anew against the dollar on Tuesday as the greenback recovered after negative sentiment over political noise in the United States, particularly over the Trump administration’s failure to pass its healthcare reform bill, subsided.
The local currency closed at P50.18 versus the greenback yesterday, six centavos lower from its P50.12 per dollar close during Monday’s session.
The peso opened the foreign exchange market at P50.16 versus the foreign currency, while its worst showing for he day was at P50.205 per dollar. The local currency’s peak was seen at P50.15 against the greenback.
Dollars traded on Tuesday declined to $393.4 million from the $497.2 million that changed hands the previous session.
Traders said the dollar recovered against a basket of currencies yesterday after market players moved on from US President Donald J. Trump’s administration’s inability to gain enough support for his flagship healthcare bill, which was one of his major campaign promises.
“The peso depreciated slightly today as investors started to shrug off the negative sentiment brought about by the Trump administration’s failure to pass its healthcare reform bill,” one trader said in an e-mail yesterday.
Another trader said, “Markets are not on a risk- on sentiment as they tried to set aside what happened in the US last Friday regarding the healthcare bill so the dollar recovered…There was better risk appetite from people so we bought the dollar.”
Reuters reported that global markets appeared to have set aside the Mr. Trump’s first major legislative setback, with investors now having tentative hopes for the president’s fiscal plans.
“Affirmations from Federal Reserve officials of more US rate hikes this year might have also prompted investors to drop the peso and buy more dollars,” one trader noted.
Dallas Fed President Robert Kaplan spoke on Monday and announced his support for more interest rate increases by the US central bank should the US economy continue to expand by 2.25% this year and even hit the Fed’s target of full employment and inflation clocking in at 2%.
The other trader said, “Although the dollar was higher, the pair was still subdued and it was still in a tight range. Market jitters have died down over what happened on Friday — that’s why equity markets recovered.”
For Wednesday, both traders said peso may play between P50.10 and P50.30 against the dollar.
“Despite likely balanced speeches from various US policymakers, the peso might again show a slight downward bias due to month- end dollar demand,” one trader noted.
Most emerging Asian currencies on Tuesday fell from multimonth highs the previous day as the dollar gained back a bit of strength and traders took profits on regional units.
Technical indicators such as the Relative Strength Index showed the Taiwan dollar, the Indian rupee and the Thai baht are in the overbought zone and a few other currencies near that zone.