THE PESO inched higher against the dollar on the back of risk-on sentiment as the first phase of trade negotiations between the United States and China went well, with Beijing vowing to buy $50 billion worth of agricultural products from the world’s largest economy.
The local unit ended at P51.57 versus the greenback on Monday, appreciating by a centavo from its P51.58 a dollar close on Friday.
The peso opened the session at P51.57 versus the dollar. Its weakest point was logged at P51.60, while its intraday best was at P51.43 against the greenback. Dollars traded on Monday climbed to $1.17 billion from $981.25 million on Friday.
According to a trader, the peso’s strength was fueled by positive sentiment following the a preliminary deal between the US and China following last week’s talks.
“This consists of China buying more agricultural products from the US while the US will have to postpone its tariffs that are originally to take effect this Oct. 15,” the trader said by phone.
“However, some analysts are still cautious on the trade war considering that the December tariff is still on the table,” a second trader said via phone.
US President Donald Trump on Friday outlined the first phase of a deal to end a trade war with China and suspended a threatened tariff hike, but officials on both sides said much more work needed to be done before an accord could be agreed.
The emerging deal, covering agriculture, currency and some aspects of intellectual property protections, would represent the biggest step by the two countries in 15 months to end a tariff tit-for-tat that has whipsawed financial markets and slowed global growth.
US Treasury Secretary Steven Mnuchin said the agricultural purchases could scale up to $40-50 billion annually as part of a partial trade deal, potentially more than doubling the $24 billion in agricultural and related products China purchased from the US in 2017.
Farmers in the US who relied on China as their top buyer for soybeans and sorghum and a key market for pork and dairy, have seen their incomes plummet during the 15-month conflict of tit-for-tat tariffs between the world’s two largest economies.
For today, the first trader expects the peso to move around the P51.40-P51.60 band amid a US holiday, while the second trader believes the local unit will play around P51.55-51.75 versus the dollar. — LWTN with Reuters