Peso up on Trump’s protectionist remarks

THE PESO regained strength against the dollar on Wednesday, following the three-day decline, on the back of President Donald J. Trump’s protectionist remarks in his first State of the Union address.

The local currency finished at P51.295 against the dollar yesterday, rising by 12.5 centavos from its P51.42 close on Tuesday.

The peso opened the session slightly weaker at P51.43 versus the dollar, while its intraday trough was seen at P51.45. Its best showing for the day was at P51.25 to the greenback.

Dollars traded increased to $ 943.05 million on Wednesday from the $ 926.45 million that changed hands in the previous session.

“The peso rebounded [ yesterday] amid protectionist cues from Trump’s State of the Union address which has caused the dollar to lose its strength within the day despite a stronger open,” a trader said in an e-mail on Wednesday.

In his speech, Mr. Trump said the “era of economic surrender is totally over,” as he vowed to fix “bad trade deals,” although he did not specify any agreements.

“From now on, we expect trading relationships to be fair and, very importantly, reciprocal. We will work to fix bad trade deals and negotiate new ones,” Mr. Trump said.

He added that the country’s trade rules will be strongly enforced to protect the American workers and American intellectual property.

As anticipated, Mr. Trump boasted of the recently passed tax cuts, which he claimed to be the biggest in American history.

“Our massive tax cuts provide tremendous relief for the middle class and small business,” he said.

Mr. Trump also noted that the reform also slashed corporate taxes to 21% from 35% “so American companies can compete and win against anyone else anywhere in the world.”

Meanwhile, Ruben Carlo O. Asuncion, chief economist of UnionBank of the Philippines, said market players “expected more” from Mr. Trump’s address.

“It was though of lacking specifics like the previous address. Plus, a lot of his hits have been misses so far,” Mr. Asuncion said in a mobile phone message, adding that the “correction seems to have arrived.”

Another trader shared the same sentiment: “[The peso] just [followed] the move of the dollar where we’re seeing a bit of a correction, which was bound to happen.”

For today, Mr. Asuncion said the peso might move between P51.20 and P51.50, while the first trader gave a slightly wider range of P51.10 to P51.50.

“[Today], I guess the markets will want to wait and see what the sentiments will be after the FOMC ( Federal Open Market Committee) meeting,” the second trader said.

“The peso is expected to weaken as investors might take advantage of the weaker dollar ahead of a likely hawkish tone from the US Federal Reserve meeting,” the first trader added.

Asian currencies posted modest gains on Wednesday as caution ahead of the Federal Reserve decision due later capped strength in regional units against the dollar after Mr. Trump’s speech. •