THE PESO slipped against the dollar on Tuesday as the US Federal Reserve was set to begin its two-day policy meeting overnight.
The local unit closed at P58.425 per dollar on Tuesday, weakening by a centavo from its P58.435 finish on Monday, Bankers Association of the Philippines data showed.
The peso opened Tuesday’s session weaker at P58.48 against the dollar. It climbed to as high as P58.40, while its worst showing was at P58.56 versus the greenback.
Dollars traded increased to $1.66 billion on Tuesday from $1.53 billion on Monday.
The peso inched lower as the dollar was stronger on Tuesday with the Fed scheduled to start its two-day review later in the day, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The dollar was initially weaker but rallied as focus turned to the Fed meeting, a trader likewise said in a phone interview.
For Thursday, the trader expects the peso to move between P58.20 and P58.70 per dollar, while Mr. Ricafort said it could range from P58.35 to P58.55.
Philippine financial markets are closed on Jan. 29 (Wednesday) for the Lunar New Year holiday.
The dollar firmed against the yen and euro on Tuesday on new US tariff threats, giving traders little time to catch their breath after Monday’s big risk-off moves on concerns that US dominance in artificial intelligence (AI) technology may be wavering, Reuters reported.
Any market relief that US President Donald J. Trump stopped short of hiking tariffs on US trading partners immediately after taking office last week has quickly faded.
Mr. Trump said he planned to impose tariffs on imported computer chips, pharmaceuticals and steel in an effort to get the producers to make them in the United States.
That verbal salvo came a day after the US and Colombia pulled back from the brink of a trade war when the White House said the South American nation had agreed to accept military aircraft carrying deported migrants.
Mr. Trump has flagged possible 25% duties on imports from Canada and Mexico on Feb. 1, and has threatened to hit the European Union and China with tariffs as well.
The dollar index, which measures the US currency against six rivals, rose 0.08% to 107.89, after dropping to its lowest level since mid-December at 107.68 the previous day.
The focus on tariffs had traders reversing some of the large risk-off moves made on Monday as Chinese startup DeepSeek’s free open-source AI model raised questions about the sky-high valuation and dominance of US AI bellwethers like Nvidia.
The yen slid back within its recent trading range against the greenback, after safe-haven bids sent the Japanese currency to its highest level since mid-December at 153.715 on Monday.
Against the yen, the dollar traded up 0.84% at 155.79 yen.
The Federal Reserve’s two-day meeting begins on Tuesday where it is expected to keep interest rates steady. Investors will look for any hints on whether a rate cut could happen soon if inflation eases closer to the US central bank’s 2% annual target.
For the Fed, the focus will be on Mr. Trump’s early moves on broader policy that are likely to shape the economy this year.
Fed officials have already nodded to potential effects from Mr. Trump’s trade, immigration and other policies, with staff at the December meeting penciling in assumptions for slightly slower growth, higher unemployment and little further progress on inflation for the coming year. — Aaron Michael C. Sy with Reuters
