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Peso down on risk-off sentiment

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THE PESO weakened anew against the dollar on Tuesday as risk-off sentiment prompted investors to shy away from riskier currencies due to the geopolitical tensions overseas.

The local currency ended Tuesday’s session at P54.24 versus the greenback, 5.5 centavos lower than the P54.185-per-dollar finish last Monday.

The peso opened the session slightly stronger at P54.16 and reached an intraday high of P54.10 against the dollar. Its worst showing was its closing rate.

Dollars traded dropped to $605 million from the $845.04 million the previous day.

A foreign exchange trader said the peso traded stronger in the morning on the back of inflows as well the rise in the stock market.

“Aside from the remittance, the peso strengthened in the [morning] session due to the equity movement since the local equity market was at the 7,000 support level,” the trader said in a phone interview.

The trader added that the peso’s strength was reversed in the afternoon trading due to risk-off sentiment, triggering investors to pile more dollars.

“We saw lifting of the dollar across the board due to risk-off sentiment, so we have news in Italy as well as the lingering US-China trade tensions.”

In a report from Reuters, Italy’s Deputy Prime Minister Matteo Salvini said the government would not change its plan to increase its deficit spending next year as it would curb unemployment while boosting the national income.

The European Union has expressed concern over Rome’s budget targets, although noting that a softer tone over the budget would improve its talks with Italy.

Meanwhile, China’s central bank on Sunday announced a steep cut in the banks’ reserve requirements, which was seen as an action to calm investor worries about its trade spat with Washington.

For Wednesday, the trader expects the peso to move between P54.10 and P54.30 versus the dollar, while another trader gave a P54.15-P54.35 range. — K.A.N. Vidal