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Peso declines to new 12-year low

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THE PESO weakened against the dollar to log a fresh 12-year low on Monday due to continued trade tensions overseas and ahead of expected tightening moves from the local and US central banks.

The local unit ended Monday’s session at P54.23 versus the greenback, 19 centavos weaker than the P54.04-per-dollar finish last Friday.

This was the peso’s weakest finish in nearly 13 years since it closed at P54.30 against the dollar on Nov. 24, 2005.

The peso traded lower the whole day, opening the session to its intraday high of P54.12 versus the dollar. Meanwhile, its worst showing stood at P54.28.

Trading volume inched up to $670.6 million from the $669.9 million that switched hands the previous session.

“The peso again fell to a new 12-year record low after the Chinese government cancelled its trade discussions with the United States,” a foreign exchange trader said in an e-mail Monday.

Beijing has canceled the planned trade talks with Washington as the world’s two largest economies slapped another round of tariffs against each other, the Wall Street Journal reported on Friday.

On Monday, US President Donald J. Trump’s 10% duty on $200-billion worth of Chinese goods took effect, a tit-for-tat response on the levies slapped by China on $60 billion worth of American products.

“I think [the peso weakness is] more of the dollar movement so we saw strengthening of the dollar across the board,” another trader said in a phone interview.

The second trader said the peso traded within a range of P54.15 to its intraday low of P54.28 until it quickly reversed to close at P54.23.

“I think most of the investors are trading more of in a trading range or light ahead of BSP (Bangko Sentral ng Pilipinas) and Fed (US Federal Reserve) meetings this week,” the trader added.

The local central bank is widely expected to raise its benchmark rates during the Monetary Board meeting on Sept. 27 to temper inflation expectations.

Meanwhile, the Fed is also seen to tweak its policy stance amid tightening job market and inflation surpassing the 2% target.

On Tuesday, the first trader expects the peso to move between P54.12 and P54.25, while the other gave a P54.15-P54.35 range.

“The local currency might further weaken ahead of the release of US September consumer confidence data which is expected to boost the greenback’s appeal over the peso,” the second trader noted. — Karl Angelo N. Vidal