Peso seen stabilizing with 'slight weakness' as Trump ratchets up trade war


Posted at Aug 02 2019 09:56 AM | Updated as of Aug 02 2019 12:32 PM

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MANILA -- The peso will likely stabilize at the P52 per dollar level in the near term, with "slight weakness" as the heightened trade tensions between US and China propped up the dollar against emerging market currencies, an analyst said Friday.

The peso opened at P51.32 to the dollar, from P51.20 on Thursday.

US President Donald Trump's threat to raise tariffs on more Chinese groups is "clearly positive for the dollar" with a stock selloff in Asia driving demand for the greenback, said Divya Devesh, Asia foreign exchange strategist at Standard Chartered.

Trade tensions can also hit exports, Devesh said. August is also "typically negative" for the peso, with the dollar stronger against the dollar during the month in the last 8 years, he said.

"Domestically and externally, things look negative for the peso so we expect slight weakness," Devesh said.

"Near term, it looks like the dollar could strengthen further against emerging market currencies," he said.

The peso's performance against the dollar in the January to June period was "phenomenal," Devesh said, adding "it will be very difficult to repeat that in the second half."