Peso weakens on concerns over US-China trade spat

The peso dropped versus the dollar on Thursday due to concerns over renewed trade tensions between the United States and China.

The local unit weakened by seven centavos to close at PHP 58.125 against the greenback from its PHP 58.055 finish on Wednesday, Bankers Association of the Philippines data showed.

The peso opened Thursday’s session stronger at PHP 57.999 versus the dollar. Its intraday best was at PHP 57.98, while its worst showing was at PHP 58.16 against the greenback.

Dollars traded went down to USD 1.69 billion on Thursday from USD 1.73 billion on Wednesday.

The peso declined due to market concerns over the trade spat between the world’s two largest economies, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The US dollar headed for a third straight daily loss against the euro while edging up versus the yen on Thursday, as concerns over US-China tensions and dovish remarks from Federal Reserve officials continued to weigh on sentiment, Reuters reported.

The dollar index, which measures the greenback against six other currencies, was down 0.05% at 98.63, and was on track for a weekly decline of around 0.3%.

Investors were scrutinizing China’s latest expansion of rare earth export controls, a move sharply criticized by senior US officials on Wednesday, who warned that it could disrupt global supply chains.

Amid the tit-for-tat action, US President Donald J. Trump still expects to meet Chinese President Xi Jinping in South Korea this month, US Treasury Secretary Scott Bessent said.

The peso fell on worries that the ongoing corruption scandal could affect the Philippines’ credit rating, a trader said in an e-mail.

Finance Secretary Ralph G. Recto earlier said that S&P Global Ratings was set to upgrade the country’s credit rating this year if not for the widening scandal involving state infrastructure projects.

The controversy, which involves “ghost” projects and fund misuse in government flood control programs, has triggered investigations by Congress, the Commission on Audit, the Ombudsman, and the Independent Commission for Infrastructure.

For Friday, the trader said the peso could depreciate further as strong earnings reports from US major banks could boost the greenback.

The trader sees the peso moving between PHP 58 and PHP 58.25 per dollar on Friday, while Mr. Ricafort said it could range from PHP 58.05 to PHP 58.25. — Aaron Michael C. Sy with Reuters