MANILA -- The Philippine peso ended Friday's session better against the US dollar amid external volatilities but the Philippine Stock Exchange index (PSEi) surrendered to bearishness.
The local unit finished the trading week at 52.07 from Thursday’s 52.24 close.
It opened the day at 52.175 from 52.3 a day ago, and traded between 52.24 and its closing level, resulting in an average of 52.161.
Volume amounted to USD1.23 billion from the previous session’s USD1.27 billion.
“We’re continuing to see the recovery of the peso in the short term,” a trader of a local bank told the Philippine News Agency (PNA).
The trader attributed the peso’s positive close Friday to the Bangko Sentral ng Pilipinas’ (BSP) decision to keep rates steady Thursday and the continued decline of domestic inflation rate.
The central bank’s policy-making Monetary Board (MB) on Thursday maintained the BSP’s key rates on expectations that inflation rate will go back to the target range of 2 to 4 percent this year.
This, as inflation continues to decelerate after peaking at 6.7 percent in September and October 2018.
Last January, inflation slowed down to 4.4 percent from 5.1 percent last December.
The trader explained that if inflation's downtrend is sustained, there will be tangible yields soon, noting that the central bank’s overnight reverse repurchase (RRP) rate is now at 4.75 percent.
“That makes the peso more attractive if you want to invest in Philippine assets,” the trader said, noting that this partly drives the increase of foreign funds going to the Philippines.
General improvement of the local equities market, with the main index remaining at 8,000-level, is also helping the peso. “If this continues, it bodes well for the peso,” the trader said.
The trader said the peso is generally projected to remain weak this year on account of the volatilities in the global economy due to the China-US trade issue and the Brexit.
The Philippines’ twin deficit, namely the current account and budget deficits, remains as risks to the peso, the trader said.
Next week, the currency pair is seen to break the 52-level and try to improve to the 51-level.
On the other hand, the Philippine Stock Exchange index (PSEi) lost 0.36 percent, or 29.41 points, to 8,070.89 points. All Shares tracked the main gauge after a drop of 0.21 percent, or 10.25 points, to 4,896.32 points.
Industrial led the sectors with a 0.99 percent drop and was followed by Financials, 0.56 percent; Property, 0.26 percent; Services, 0.03 percent; and Mining and Oil, 0.002 percent.
Only Holding Firms gained during the day after rising by 0.22 percent. Volume reached 3.16 billion shares amounting to PHP7.81 billion.
Losers led gainers at 119 to 98 while 34 shares were unchanged. “The PSEi pulled back, with investors treading cautiously amidst growing trade and global growth concerns,” the BSP's Financial Market Group Research said in a report after the day’s trading. (PNA)
