Peso may move sideways as market eyes Trump’s policies

THE PESO may trade sideways against the dollar this week as the market continues to monitor US President Donald J. Trump’s policy pronouncements.

On Friday, the local unit closed at P57.83 per dollar, jumping by 23 centavos from its P58.06 finish on Thursday, Bankers Association of the Philippines data showed.

This was the peso’s strongest close in more than two months or since its P57.735-per-dollar finish on Dec. 6, 2024. This also marked the first time that the local unit closed at the P57 level since Jan. 2.

Week on week, the peso rose by 20 centavos from its P58.03 finish on Feb. 7.

The peso surged after the Bangko Sentral ng Pilipinas (BSP) kept benchmark interest rates unchanged at its first policy meeting for the year, contrary to market expectations of a cut, a trader said in a phone interview.

The Monetary Board kept the target reverse repurchase rate unchanged at 5.75% at its review on Thursday, with BSP Governor Eli M. Remolona, Jr. citing the need to guard against global uncertainties. Rates on the overnight deposit and lending facilities were also kept at 5.25% and 6.25%, respectively.

The central bank had cut rates by 25 basis points (bps) at each of its last three meetings since it began its easing cycle in August 2024.

The BSP’s decision on Thursday came as a surprise after 19 out of 20 analysts polled by BusinessWorld had anticipated a 25-bp cut last week. Only one analyst expected the BSP to keep rates steady.

The dollar was also weaker on Friday due to tariff comments from Mr. Trump, Rizal Commercial Banking Corp. Michael L. Ricafort said in a Viber message.

For this week, the trader said the peso will move depending on the Trump administration’s tariff policy announcements and developments in the proposed Russia-Ukraine peace talks.

The trader sees the peso moving between P57.80 and P58.20 per dollar this week, while Mr. Ricafort expects it to range from P57.60 to P58.10.

The dollar was on track for a weekly loss against the euro on Friday as a delay in the introduction of trade tariffs planned by Mr. Trump raised hopes that they may not be as bad as feared, while optimism about a peace deal between Russia and Ukraine helped the single currency rally, Reuters reported.

The euro rose 0.32% to $1.0497 and got as high as $1.0514, the highest since Jan. 27. It was on pace for a weekly gain of 1.7%.

The dollar index was last down 0.35% at 106.72 and was on track for a weekly loss of 1.3%. It reached 106.56, the lowest since Dec. 12.

Mr. Trump on Thursday tasked his economic team with devising plans for reciprocal tariffs on every country that taxes US imports.

The euro and other European currencies were supported last week by optimism that Russia and Ukraine will reach a peace deal.

Mr. Trump discussed the war in Ukraine on Wednesday in phone calls with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky. — A.M.C. Sy with Reuters