Peso weakens vs dollar on fresh tensions between US and China

THE PESO weakened against the greenback on Tuesday as fresh tensions emerged between Washington and Beijing.

The local unit finished trading at P49.545 per dollar on Tuesday, depreciating by 9.5 centavos from its P49.45 close on Monday, data from the Bankers Association of the Philippines showed.

The peso opened Tuesday’s session at P49.52 per dollar. Its weakest showing for the day was at P49.58 while its intraday best was at P49.505 against the greenback.

Dollars traded increased to $793.7 million on Tuesday from the $667.15 million seen on Monday.

Fresh geopolitical tensions between the US and China triggered safe-haven demand for the dollar on Tuesday, analysts said.

“The peso weakened from dollar safe-haven demand on growing US-China geopolitical tensions,” a trader said in an e-mail.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said latest statements from the US denouncing the “unlawful territorial claims” of China in the South China sea also fueled renewed tensions between the world’s two biggest economies and affected market sentiment on the peso.

“The US was not taking sides before in the territorial disputes,” Mr. Ricafort said in a text message.

A senior US official said the Trump administration is looking to ditch a 2013 agreement with Chinese auditing authorities, which could be the beginning of a larger crackdown on US-listed Chinese firms that are sidestepping disclosure rules, Reuters reported.

The Public Company Accounting Oversight Board has been complaining about China’s failure to grant requests on financial information related to audits on Chinese firms that are trading on US exchanges.

Meanwhile, US Secretary of State Mike Pompeo said on Monday that China has no legal basis for its ambitions on the South China Sea, Reuters reported. He added Beijing has been intimidating coastal states in the region for its claims.

“We are making clear: Beijing’s claims to offshore resources across most of the South China Sea are completely unlawful, as is its campaign of bullying to control them,” Mr. Pompeo said in a statement.

On Tuesday, China rejected the statement and said the accusations of Beijing’s bullying against neighbors is “completely unjustified.”

“The United States is not a country directly involved in the disputes. However, it has kept interfering in the issue,” the Chinese Embassy in the United States said in a statement.

This Wednesday, Mr. Ricafort and the trader said the peso could move within the P49.45 to P49.65 levels against the dollar. — LWTN with Reuters