THE PESO edged down against the dollar on Monday amid increased market volatility due to fresh tariff threats from the United States against China.
The local unit closed at P58.245 versus the greenback, slipping by half a centavo from its P58.24 finish on Friday, Bankers Association of the Philippines data showed.
The peso opened Monday’s session a tad stronger at P58.222 versus the dollar. Its intraday best was at P58.12, while its worst showing was at P58.265 against the greenback.
Dollars exchanged went up to $1.65 billion on Monday from $1.41 billion on Friday.
“The dollar-peso was rangebound amid a lack of catalysts,” a trader said in a phone interview
The peso was mostly steady as the market was volatile due to renewed trade tensions between the US and China that caused some risk aversion and flight to safe havens, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
For Tuesday, the trader sees the peso moving between P58.10 and P58.40 per dollar, while Mr. Ricafort expects it to range from P58.15 to P58.35.
The dollar clawed steadily higher on Monday, as investors hoped the US would temper its latest escalation of the trade war with China after Friday’s selloff, Reuters reported.
The dollar index, which measures the US currency’s performance against a basket of six others, was last up 0.2% at 99.2, recovering from declines late last week after US President Donald J. Trump announced 100% tariffs on China.
The broadside revived bad memories of Trump’s Liberation Day rollout of sweeping tariffs in April and sparked a sell-off in stocks and cryptocurrencies on Friday.
“Certainly it’s pretty nervous out there,” said Tim Kelleher, head of institutional FX Sales at Commonwealth Bank in Auckland.
“If you look at the US and China stuff, it looks like Trump has done a bit of a TACO again and softened his tone,” he added, referring to a trading adage that “Trump always chickens out.”
After announcing the 100% tariffs on Friday, Trump said on Sunday: “Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment,” he posted on the Truth Social network. “He doesn’t want Depression for his country, and neither do I. The USA wants to help China, not hurt it!!!”
Even with sentiment on the up on Monday, analysts said the mood was fragile and currencies were likely prone to larger price swings.
“As we saw earlier this year neither side can tolerate such high tariffs for long and the comments from President Trump over the weekend again point towards a path for de-escalation,” MUFG strategist Lee Hardman said.
“As a result, the trade threats may just contribute a more volatile FX market in the near-term and trigger some unwind of carry trades,” he added. — Aaron Michael C. Sy with Reuters