Peso softens on renewed US-China tensions

The Philippine peso opened the week softer versus the US dollar, dragged by growing tensions between the world's biggest economies.

The local currency lost 14 centavos to close at P50.9:$1 from last Friday's finish of P50.76:$1.

According to Land Bank of the Philippines chief economist Guian Angelo Dumalagan, the peso was weighed down by concerns regarding trade tensions between China and the United States.

"The peso depreciated sharply amid the growing geopolitical tensions between US and China over the weekend and the sharp decline in US retail sales report last week," he said in an email interview.

Data released by the United States Commerce Department last week indicated that retail purchases collapsed 21.6% year-on-year, and 16.4% month-on-month in April.

The Trump administration was also reported that it will block shipments of semiconductors to China's Huawei Technologies.

Moving forward, Dumalagan said the peso will likely be swayed by demand for safe-haven currencies, and remarks by US Federal Reserve officials.

"The dollar is expected to move sideways, with an upward bias, this week, as demand for safer currencies might again escalate amid likely weaker economic data from the US, Japan, and the Eurozone as well as rising tension between the US and China," he said.

"The appreciation of the greenback, however, might be tempered by likely downbeat remarks from various US Federal Reserve officials, especially from US Fed Chair Powell, who is scheduled to testify before the Senate Banking Committee on Tuesday night, Philippine time," explained Dumalagan. — RSJ, GMA News