Peso climbs on US tax concerns

THE PESO strengthened against the dollar yesterday on the back of the local bourse’s performance, as well as recent political developments in the US.

The local unit closed at P50.79 against the greenback on Monday, 16 centavos stronger compared with Friday’s P50.95-per-dollar close.

The peso opened stronger at P50.88, but returned to the P51 level intraday, with its low recorded at P51.03 versus the greenback. It however rebounded to close at the session’s high.

Dollars traded dropped to $577.1 million from last Friday’s $719.6 million.

Traders interviewed said the stronger peso was due to the sideways movement of the local bourse.

“The market traded lower due to the gain of stocks toward its closing, and then we saw some inflows, so it dragged [the dollar further],” a trader said over the phone. On Monday, the Philippine Stock Exchange index closed at 8,321.98, up by 0.13% or 10.90 points.

Meanwhile, Land Bank of the Philippines market economist Guian Angelo S. Dumalagan attributed the stronger peso to developments in the US.

“The peso appreciated [yesterday] as the dollar lost some of its attractiveness amid political concerns involving the US tax reform and the alleged involvement of Russia in the US election[s],” Mr. Dumalagan said in an e-mail.

Ruben Carlo O. Asuncion, chief economist of UnionBank of the Philippines, said the market is “still riding on a high from last week’s euphoria of the stronger-than-expected [third quarter] GDP (gross domestic product) growth [of 6.9%].”

Traders said the peso will likely move between P50.40 and P51 against the dollar today. Mr. Dumalagan gave a slimmer range of P50.70 to P50.90, adding that “there might be sideways movement amid scarcity of fresh leads abroad and caution ahead of the FOMC (Federal Open Market Committee) minutes.”

Meanwhile, most Asian currencies were muted on Monday in the face of political uncertainty in Germany and lingering doubts about the prospects for US tax reform, dimming sentiment.

The dollar index, which measures the greenback against a basket of six rivals, was up 0.3%. — Karl Angelo N. Vidal with Reuters