THE peso finished a volatile trading weaker against the US dollar on Thursday, losing ground after hitting its strongest in three weeks early in the day as demand for greenbacks picked up toward the end of the session.

The local unit rose to as high as 48 per dollar before ending at the day’s low of 48.16, down six centavos from Wednesday’s close.

Total transactions at the Philippine Dealing System’s electronic exchange were thinner at $323.48 million compared with the previous session’s $522.68-million turnover.

“Some market participants thought it was time to buy dollars at the 48 level. Also, the dollar is regaining strength against other major currencies,” said Jonathan Ravelas, chief market strategist at Banco de Oro Unibank.

Ravelas said worries about the government’s fiscal position, with the market still unconvinced that this year’s budget deficit will be kept within the P250-billion goal, remained a key drag on the peso. He believed, however, that the Bangko Sentral ng Pilipinas was not in the market on Thursday, even as some analysts had expected the central bank to intervene to smoothen out any currency volatility.

The dollar recovered against major currencies after being pummeled following news that China was seeking a discussion on the need for a new global reserve currency during the G-8 summit to be held on July 9 and 10 in Italy. China reportedly wanted the G-8 summit to restart the debate on the dollar’s reserve-currency role amid the US-led global recession.

But DBS Bank strategists said: “The environment is less conducive to outright dollar selling compared to March, when the world was still emerging from the crisis.”

“Today, the US economy is looking to turn the corner, with the Fed and White House looking for positive GDP growth to return in the third quarter,” they said in a note.