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THE PESO plunged to a one-month low against the dollar on Tuesday due to China’s retaliation against the United States’ imposition of increased tariffs on Chinese goods.
The local unit closed Tuesday’s session at P52.435 versus the greenback, down 31.5 centavos from the P52.12-per-dollar finish last Friday.
This was the peso’s weakest showing in more than a month or since it closed at P52.44 per dollar on April 2.
The peso opened the session weaker at P52.37 per dollar, sliding to as low as P52.45. On the other hand, its best showing stood at P52.345 versus the US currency.
Dollars traded dropped to $881.1 million from the $1.001 billion that changed hands the previous session.
Foreign exchange traders said yesterday that the peso plunged versus the greenback due to renewed trade tensions between the US and China.
Chinese Finance Ministry said on Monday that Beijing is set to raise tariffs on $60 billion worth of American goods by June 1, a retaliatory measure for Washington’s increased levies on $200 billion in Chinese goods to 25% from the previous 10%.
US President Donald J. Trump said he had not decided on imposing the 25% tariff on the remaining $325 billion worth of Chinese imports.
Despite deepening US-China trade tensions, Mr. Trump confirmed he will meet his Chinese counterpart Xi Jinping next month during the G20 summit in Japan.
“Mainly, the dollar-peso is still driven by risk-off sentiment, which was also present in our local equity market given that it’s down by 1.23%,” a trader said in a phone interview, adding that the risk aversion among market players is seen across the Asian markets.
Another trader said apart from the trade tensions between the world’s two largest economies, the risk-off sentiment also stemmed from the anticipation of a possible cut in big banks’ reserve requirement ratio (RRR) on Thursday at the Bangko Sentral ng Pilipinas’ (BSP) Monetary Board’s meeting.
Currently, commercial and universal banks are required to keep at least 18% of their deposits with the BSP.
Trimming the RRR by a percentage point is expected to unleash about P90 billion into the financial system.
For today, the first trader expects the peso to move between P52.35 and P52.65, while the other gave a P52.25-P52.55 range. — Karl Angelo N. Vidal