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THE PESO weakened against the dollar on Tuesday, snapping its rally, as market players reduced their short positions amid a generally stronger greenback.
The local unit closed Tuesday’s session at P51.765 versus the greenback, 12.5 centavos weaker than the P51.64-per-dollar finish on Monday.
The peso traded weaker the whole day, opening the session at P51.70 versus the greenback. It slipped to as low as P51.77, while its intraday high was at P51.67 against the US currency.
Trading volume climbed to $810.45 million from $581 million that switched hands the previous session.
Traders interviewed said the peso corrected versus the dollar after its five-day rally.
“The peso corrected higher today after days of gains. For the past few trading sessions, we’re seeing an improvement versus the dollar,” a foreign exchange trader said in a phone interview on Tuesday.
“We’re thinking of remittances, so the flow might be cyclical. But today, we saw generally firmer dollar.”
Another trader attributed the strengthening of the dollar to generally upbeat corporate income reports in the United States.
“The earnings reports in the US are still coming in and they’re mostly positive. These fuel risk appetite,” the second trader said.
Reuters reported that the dollar inched higher against major currencies as investors stood cautious as they looked for firmer hints of stabilization in the global economy.
The dollar index strengthened a tad at 96.98 versus a basket of its key rivals.
“We just saw market players reduce short dollar positions. We saw the dollar itself just traded a bit firmer against most of the major currencies,” the first trader said.
For today, the first trader expects the local unit to trade between P51.60 and P52 versus the dollar, while the other gave a P52.55-P52.79 range.
“The local currency might rebound due to strong peso demand ahead of the holidays this week,” a third trader said in an e-mail, giving a P51.60-P51.90 range for today. — K.A.N. Vidal