MANILA -- The Philippine peso ended against the US dollar firm on Monday but the Philippine Stock Exchange index (PSEi) fell as investors digest news overseas, such as the one percent cut in Chinese banks’ reserve requirements ratio (RRR).
The local currency finished the week’s first trading day at 54.185 from 54.23 Friday last week, which a trader attributed to risk-off sentiment given the latest decision of the People’s Bank of China (PBoC) to cut banks’ RRR.
For the day, the unit opened at 54.25, little changed from the 54.3 in the previous session.
The currency pair strengthened to as much as 54.15 but also hit 54.3, resulting to an average of 54.232.
Volume reached USD845.04 million, way higher than the USD592.5 million at the end of last week.
The currency pair is seen to trade between 54.10 and 54.30 Tuesday.
On the other hand, the PSEi shed 0.39 percent, or 27.38 points, to 7,050.82 points.
Landbank market economist Guian Dumalagan said PBoC’s decision on RRR, which will take effect on October 15, was unexpected.
Citing reports, he said RMB450 billion of the liquidity that be provided through the RRR cut will be used to replace maturing medium-term lending facility (MLF) while about RMB750 billion will be additional market liquidity.
“The PBoC had been carefully balancing between the two targets of stabilizing domestic growth and the renminbi exchange rate since July, but the most recent cut could suggest a higher priority of stabilizing domestic growth amid notable escalation in US-China confrontation after US Vice President Pence’s speech on 4 Oct (October),” he said.
US Vice President Mike Pence claimed that China is meddling with US politics to remove President Donald Trump from power.
Aside from the RRR cut in China, investors also took note of the drop in US stocks last Friday, Dumalagan said.
Thus, the broader All Shares mirrored the main index and declined by 0.36 percent, or 15.52 points, to 4,347.84 points.
Most of the sectors also ended on the red, with Industrial leading with 0.70 percent drop and was followed by Holding Firms, 0.51 percent; Property, 0.27 percent; and Financials, 0.10 percent.
Volume was thin at 769.203 million shares amounting to almost PHP4 billion.
Losers led gainers at 115 to 71 while 56 shares were unchanged. (PNA)
