Peso to climb on US-China deal

THE PESO is expected to strengthen against the dollar this week due to positive developments in the US-China trade relations.
The local currency ended last week at P52.065 against the greenback, up 6.5 centavos from Thursday’s P52.13 finish, propelled by hawkish comments from Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo.
Week on week, the peso also appreciated from the P52.43-per-dollar finish last Feb. 15.
Traders interviewed said the peso could strengthen against the dollar this week as risk appetite improved following the extension of the trade truce between US and China.
US President Donald J. Trump announced yesterday that Washington is planning on delaying the additional tariffs on Chinese goods scheduled to begin on March 1 as its talks with China made “substantial progress.”
He added that the world’s two largest economies are planning to conduct a summit in Mar-a-Lago, Florida to “conclude an agreement.”
“Should we have good trade headlines coming out from US and China, that could further bring about a stronger peso,” a trader said last Friday, although noting that the US-China trade developments are “widely priced in already.”
Meanwhile, a market analyst said the “welcome development” could improve investors’ risk appetite, which can counteract any deterioration in market sentiment as a result of the postponement of a final vote on the Brexit divorce agreement of British Prime Minister Theresa May.
“Towards the end of the week, the dollar is expected to depreciate further amid expectations of weaker US economic data on housing and GDP (gross domestic product) growth,” the analyst added.
“The dollar’s decline, however, might be tempered by potentially mixed Chinese manufacturing and nonmanufacturing data,” the analyst said.
Meanwhile, Rizal Commercial Banking Corp. economist Michael L. Ricafort said the passing of BSP Governor Nestor A. Espenilla, Jr. “should have no impact” on the peso-dollar trading as the “monetary policy direction would likely remain the same.”
Mr. Espenilla passed away on Saturday after battling tongue cancer since late 2017. He had been on intermittent medical leaves since, after undergoing surgery and radiation therapy.
For this week, the analyst expects the peso to trade between P51.75 and P52.35 versus the dollar, while the trader gave a P51.80-P52.20 range. Mr. Ricafort, on the other hand, sees the local unit trading within P52-P52.30. — Karl Angelo N. Vidal