Peso at 7-month high as tariffs weigh on USD

The peso strengthened to a seven-month high on Tuesday as the greenback continued to struggle due to tariff uncertainties.

The local unit closed at PHP 56.145 per dollar on Tuesday, surging by 27.5 centavos from its PHP 56.42 finish on Monday, Bankers Association of the Philippines data showed.

This was the peso’s best finish in seven months or since its PHP 56.03-a-dollar close on Sept. 30, 2024.

The peso opened Tuesday’s session stronger at PHP 56.333 against the dollar. It climbed to its intraday best of PHP 56.10, while its weakest was at PHP 56.35 versus the greenback.

Dollars exchanged rose to USD 1.78 billion on Tuesday from USD 1.57 billion on Monday.

The peso rose due to a weak dollar “after Chinese Foreign Minister Wang Yi said China would seek solidarity with other countries against US tariff threats after news that the Trump administration is exploring a new trade tool to pressure China,” a trader said in a phone interview.

The dollar recouped some of its losses on Tuesday, supported by reports that the US administration may ease planned tariffs, although investor caution lingered over whether a meaningful de-escalation in the US-China trade conflict was in motion, Reuters reported.

The administration of US President Donald J. Trump was set to take steps on Tuesday to soften the impact of his automotive tariffs.

The United States and China in recent days seemed to have softened their respective stances, with Washington signaling openness to reducing tariffs and Beijing exempting some US imports from its 125% levies.

Still, US Treasury Secretary Scott Bessent said that it was up to China to de-escalate on tariffs — the latest in a slew of conflicting signals over progress on trade talks between the world’s two largest economies.

The US dollar index, a measure of the greenback’s value relative to a basket of foreign currencies, strengthened 0.15% to 99.23 after falling 0.58% the previous day.

It remained on track for its biggest monthly drop since November 2022, as tariff tensions stoked fears of a global economic slowdown and undermined confidence in US assets.

The dollar rose against other major currencies, adding 0.25% to 142.38 yen.

Lower global crude oil prices also supported the peso, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort added in a Viber message. Brent crude was 1.4% weaker at USD 65 a barrel on Tuesday.

For Wednesday, the trader expects the peso to move between PHP 56 and PHP 56.40 per dollar, while Mr. Ricafort sees it ranging from PHP 56.05 to PHP 56.25. — Aaron Michael C. Sy with Reuters