MANILA -- The Philippine peso regained its footing against the greenback Tuesday, while the Philippine Stock Exchange index (PSEi) moved sideways with a downward bias, reportedly weighed down by negative news overseas.
The local currency ended the day at 52.43 from 52.57 a day ago. It opened little changed for the day at 52.53 from 52.51 in the previous session but improved to as much as 52.41. However, it also touched 52.565, resulting in an average of 52.482.
Volume is higher at USD939.03 million compared to the previous day’s USD886.07 million.
Standard Chartered Bank ASEAN and South Asia FX Research chief Devesh Divya, in a briefing Tuesday, forecasts the peso to touch the 54-level against the US dollar this year if the Federal Reserve becomes more aggressive in increasing its rates, if the US-China trade discussions fail to result in a positive deal, and on continued volatility of global oil prices.
He projects two Fed hikes this year but noted that this is not expected to be supportive of the US currency.
“Monetary policy in the US is likely to be less supportive of the dollar over the coming year or two,” he said, noting that “markets are really focused on the end of the Fed hike cycle and that’s the key reason why the dollar is unlikely to get much support from more rate hike.”
On the other hand, he noted that the local currency “remains a highly idiosyncratic story for us.”
“But going into 2019, we think the peso has gone back to its sort of modest pace of depreciation that we have seen in the last three to four years. And we think that it is likely to continue in 2019,” he said.
Divya cited that “growth story in the Philippines remains quite strong and that’s obviously attractive for flow of funds.”
He also said that the Bangko Sentral ng Pilipinas (BSP) “still has ample FX (foreign exchange) reserves, which means that it is in a position to tackle any volatility.”
“Unlike in three or four years back that the peso is quite over-valued, now we don’t think that the peso is over-valued. It’s probably close to its fair value at these levels,” he added.
Meanwhile, news that the US Department of Justice filed criminal charges against Huawei Chief Financial Officer Meng Wanzhou contributed to the risk-off sentiment in the local equities market.
This is on top of jitters caused by uncertainties related to US-China trade talks and the possible outcome of the Brexit measures being proposed by UK Prime Minister Theresa May.
Thus, the Philippine Stock Exchange index (PSEi) fell 0.04 percent, or 3.10 points, to 8,050.82 points.
The broader All Shares, on the other hand, managed to register a 0.007 percent, or 0.34 points, increase to 4,856.72 points.
Most of the sectors ended with gains, led by the Holding Firms, 0.48 percent and were followed by the Financials, 0.19 percent; Industrial, 0.05 percent; and Services, 0.02 percent.
On the other hand, Property declined by 1.26 percent, and Mining and Oil by 0.22 percent.
Volume reached 1.9 billion shares amounting to PHP8.2 billion.
Losers led gainers at 124 to 86 while 33 shares were unchanged. (PNA)
