Peso may track US-China trade talks

“The dollar-peso initially went to highs of P55.82, tracking the dollar strength after Trump’s talk with the German chancellor and trade talks with the US,” a trader said by telephone. “Later, there was profit taking and defensive trading because of US- China trade talks over the weekend and elections.”

The peso closed at P55.51 a dollar on Friday, 11.5 centavos stronger than a day earlier, according to Bankers Association of the Philippines data posted on its website. Week on week, it gained six centavos.

US President Donald J. Trump said on his Truth Social platform the US and China had made “great progress” in negotiating trade policies.

After taking office this year, Mr. Trump increased tariffs on Chinese imports to 145%, leading China to retaliate by raising levies on US imports to 125%.

Market optimism also supported the peso on Friday after Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona said the Monetary Board could cut rates by up to 75 basis points (bps) more this year, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

Last week, the BSP chief told Bloomberg the central bank is open to cutting key rates by 75 bps more this year as inflation continues to ease.

The Monetary Board last month resumed its easing cycle after an unexpected pause in February, cutting benchmark rates by 25 bps to 5.5%. Its next meeting is on June 19.

The trader expects the peso to move sideways this week, depending on the results of the US-China trade negotiations.

Mr. Ricafort said local remittance data due this week could affect the peso’s movement.

The trader expects the peso to trade at P55.30 to P55.80 a dollar this week, while Mr. Ricafort expects it at P55.20 to P55.70. — Aaron Michael C. Sy