THE PESO rebounded on Wednesday, as some traders took profit from the previous day’s trough ahead of key speeches and amid repositioning due to tensions between the United States and North Korea.
The local currency closed at P51.35 versus the greenback on Wednesday, rallying nine centavos from the P51.44-per-dollar finish logged the previous trading session.
The peso declined further to P51.48 at the session’s open. Its weakest point for the day was at P51.56 per dollar, while its intraday peak stood at P51.34.
Dollars that changed hands were valued at $801.8 million, down from the $929.3 million recorded the previous day.
Traders said the peso climbed as the market assumed a profit-taking stance.
“The peso gained slightly today due to profit taking amid speeches from various Fed[eral Reserve] officials and concerns over North Korea’s missile program,” Land Bank of the Philippines market economist Guian Angelo S. Dumalagan said in an e-mail on Tuesday.
“The peso also benefited from the dollar’s decline against the euro after hints from an ECB (European Central Bank) official about future tightening moves,” he added.
Another trader said the dollar’s slide was a surprise, noting that market players were repositioning themselves over the US-North Korea tensions.
“Although the dollar reversed its move, I guess it was a significant reversal. We reached a high and then eventually, we saw the dollar move back a little bit lower again. I guess the market was trying to position a long dollar position,” the trader said in a phone interview.
For today, the market is expected to consolidate as investors continue to look for clues over US officials’ rhetoric on the Fed’s policy stance.
“But for the past months they are consistent that they will still hike this year. If that is still their stance, it will be supportive of the US dollar,” the second trader said, projecting a P51.30- to P51.60-per-dollar range today.
“The trend is still there. There’s a lot adjusting their position,” the trader added.
Mr. Dumalagan said the peso-dollar exchange rate may move within the 51.20 to 51.50 range.
“The peso might depreciate, as investors might focus on the planned balance sheet normalization of the US, which will be reflected in the FOMC (Federal Open Market Committee) minutes,” he said.
Meanwhile, other emerging Asian currencies were mostly steady against the dollar on Wednesday, remaining broadly supported as concerns US President Donald J. Trump’s tax overhaul plan could stall kept pressure on the greenback against its major counterparts. — EJCT with Reuters