Peso gains amid tariff threats

Emerging market (EM) currencies, including the Philippine peso, gained versus the United States (US) dollar in the aftermath of US President Donald Trump's tariff spree, according to the think tank Capital Economics.

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"EM currencies have generally strengthened against the dollar since 'Liberation Day.' Those of some oil exporters have weakened though," Capital Economics research assistant Jack Oatley noted in an April 28 report.

Since Trump announced last April 2 the 10-percent baseline for all countries and higher reciprocal tariffs on trading partners with which the US has a trade deficit, the peso appreciated against the greenback by about one percent, Capital Economics data showed.

This extended the relative strength that the peso has been enjoying since the beginning of this year.

"We still expect a stronger US dollar and higher treasury yields in Trump's presidency.

Fortunately, EM currency crisis risks are nearing a historic low," Capital Economics said.

The think tank still expects the peso to fall to the P62:$1 level this year.

Despite this, the peso is among the least vulnerable to sharp currency falls, based on Capital Economics' latest EM Currency Crisis Risk Indicator.