THE PESO bounced back on Tuesday after sinking to the P51-per-dollar level on Monday, with the market pricing in unexpectedly weaker US manufacturing data for November.
The local unit closed at P50.951 versus the greenback on Tuesday, strengthening by 12.90 centavos from the P51.08-per-dollar close on Monday, according to data from the Bankers Association of the Philippines.
The peso started the day at its Monday finish of P51.08 per dollar. Its weakest point was at P51.135, while its best showing versus the greenback was at its close of P50.95. Dollars traded ballooned to $1.499 billion from $1 billion logged on Monday.
According to UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion, markets ended “largely mixed” on the back of escalating trade uncertainties.
“It may be that this slight appreciation may mean that players are looking for more steady assets as the trade deal initially pumping optimism in global markets is now again treading very shaky uncertainty,” Mr. Asuncion said in a text message.
Meanwhile, a trader attributed to the local unit’s recovery to the release of US manufacturing data.
“The peso recovered today following the release of weaker-than-expected US manufacturing data yesterday which partly reduced some appeal towards the greenback,” the trader said in an e-mail.
Reuters said a US news platform Axios report cited a source close to the negotiating team of US President Donald J. Trump who said the deal between the US and China was “stalled because of Hong Kong legislation.”
Aside from this, the deal was stalled because time was needed to allow Chinese President Xi Jinping’s domestic politics to calm, the report added, citing the unnamed source.
Meanwhile, the Institute for Supply Management’s (ISM) index of national factory activity fell to 48.1 in November from 48.3 in October, down for a fourth month. The reading was below expectations of 49.2 from a Reuters poll of 57 economists.
A separate report on Monday showed US construction spending in October dropped as well, falling 0.8% as investment in private projects tumbled to the lowest level in three years.
For today, Mr. Asuncion said the peso will range from P50.80-51.10 against the dollar. Meanwhile, the trader penciled a forecast of P50.85 to P51.05.
Meanwhile, most Asian currencies were unchanged on Tuesday, as gains against a weaker dollar were offset by concerns about the United States sparking off a trade war with Brazil and Argentina, amid an ongoing dispute with China. — L.W.T. Noble with Reuters