Peso inches higher against dollar

THE PESO inched higher against the dollar on Thursday due to reports of China slowing down its purchases of US Treasury bonds and amid bargain-hunting in the afternoon session.

The local currency moved sideways to finish at P50.36 against the greenback yesterday, two centavos stronger than its P50.38per-dollar close on Wednesday.

The peso opened the session at P50.385 against the dollar, while its worst showing stood at P50.44. Its intraday high, meanwhile, was at P50.33 versus the greenback.

Trading volume declined to $833.7 million yesterday from the $1.1 billion that changed hands in the previous session.

“During the morning trade, the peso was generally stronger following reports that China will taper down its US Treasury purchases,” a trader said in an e-mail on Thursday.

China is “perceived to have a large share of US Treasuries in the market,” the trader said.

However, China’s foreign exchange regulator said on Thursday that a recent report on China considering slowing or halting purchases of US. Treasury bonds could be based on erroneous information.

Bloomberg News reported on Wednesday that Chinese officials reviewing the country’s vast foreign exchange holdings have recommended slowing or halting purchases of US Treasury bonds amid a less attractive market for them and rising US-China trade tensions.

China has been diversifying its forex reserves investments and its investments in US. Treasuries is market- driven, the State Administration of Foreign Exchange (SAFE) said on its web site.

China’s forex reserves management departments are responsible investors, the SAFE added.

“Bargain-hunting for the dollar prevailed in the afternoon ahead of US producer price inflation data released in the evening,” the trader added.

Meanwhile, a second trader noted that the market just consolidated throughout the day.

For today, the first trader expects the peso to move between P50.25 and P50.55, while the second trader gave a slightly slimmer range of P50.25 and P50.50.

“The peso is seen to depreciate [today] amid expectations of stronger US headline inflation for December,” the first trader noted.