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THE PESO declined against the dollar on Monday as investors flocked to safer currencies following renewed trade tensions between the United States and China.
The peso ended Monday’s session at P51.925 versus the greenback, 7.5 centavos weaker than the P51.85-per-dollar finish last Friday.
The local unit opened the session weaker at P52.06 versus the dollar. It slipped to as low as P52.08 before closing the session at its best showing for the day.
Trading volume picked up to $770.33 million on Monday from the $707.2 million that switched hands the previous day.
Foreign exchange traders attributed the decline to renewed uncertainties in the US-China trade negotiations.
“The peso depreciated from safe-haven demand from renewed US-China trade tensions after US President Donald Trump threatened new tariffs,” a trader said in an e-mail.
The Chinese yuan led the bloodbath in Asian currency markets on Monday after Mr. Trump punctured recent optimism around Sino-US trade talks by announcing hikes in tariffs on $200 billion of Chinese goods.
The surprising move from Washington along with Mr. Trump’s threat of more tariffs dramatically escalated tensions between the world’s top two economies, heavily denting risk appetite in Asia.
The yuan, resuming trade after three days of holidays last week, slumped about one percent to its weakest level in more than three months.
Most other Asian units were also roiled by the surprise move with the Indonesian rupiah weakening up to 0.6%.
The Indian rupee slid up to 0.4%. The Malaysian ringgit slipped 0.2% to its weakest level in more than four months.
The Wall Street Journal reported that Beijing is considering to cancel its scheduled trade talks this week with Washington following Mr. Trump’s threat. Chinese Vice Premier Liu He is set to head to Washington this week.
“We saw the market flock to safer currencies such as the Japanese yen. It’s one of the currencies that strengthened against the dollar,” another trader said in a phone interview.
The second trader added that the peso recovered slightly intraday as market players sold their remittances that piled over the weekend.
For today, the first trader expects the peso to move between P51.80 and P52.10, while the other gave a P51.80-P52.20 range.
“The local currency might weaken further as the likely softer Philippine inflation for April 2019 might bolster views of policy easing on the May 9 Monetary Board meeting.” the first trader said. — K.A.N. Vidal