MANILA – Risk-off sentiments reigned in both the local bourse and the foreign currency market on Friday, with the peso posting another all-time low against the US dollar, ahead of the Federal Reserve meeting next week.
The peso posted another all-time low against the US dollar at 57.43 from 57.16 a day ago.
Rizal Commercial Banking Corporation (RCBC) chief economist Michael said it surpassed the previous record last Sept. 8 when it finished the trade at 57.18.
The local currency opened the day at 57.35, a drop from its 57.1 start in the previous day.
It traded between 57.44 and 57.32, resulting in an average of 57.363.
Volume reached USD900.66 million, lower than the previous session’s USD909.8 million.
Ricafort traced the peso’s weakness to continued strengthening of the US dollar as investors anticipate another “jumbo” hike in the Federal Reserve funds rate when the Federal Open Market Committee (FOMC) meets on Sept. 20-21.
After the 225 basis points increase in the Federal Reserve’s key rates so far this year, Ricafort said the Fed is still expected to remain aggressive in its policy normalization following the higher-than-expected consumer price index (CPI) data for the US last August.
He added “the latest official 2022 estimates on wider Philippine current account deficit and balance of payment deficit on higher estimate for imports growth compared to exports growth (wider trade deficit estimate) also partly weighed on the peso.”
The Bangko Sentral ng Pilipinas (BSP) on Friday reported the revision of its 2022 balance of payment (BOP) position to a deficit of USD8.4 billion from USD6.3 billion deficit previously.
Current account projection was also revised from USD19.1 billion deficit to USD20.6 billion deficit.
Imports of goods is expected to expand by 4 percent this year, lower than 7 percent previously, while imports are expected to post higher growth at 20 percent from 18 percent in the earlier forecast.
Ricafort said projections by the World Bank (WB) of the possibility of a global economic recession this year because of the aggressive key rate hikes by central banks also hurt the peso.
He said uncertainties on polices regarding the Philippine offshore gaming operators (POGO), particularly those covering rules against illegal activities, also contributed to the peso’s weakness.
Ricafort said this “could reduce POGO revenues and also reduce other business/economic activities in the country.”
He forecasts the peso’s next resistance level to be between 57.50-57.75 and the immediate support levels between the range of 56.50-56.90.
Meanwhile, the Philippine Stock Exchange index (PSEi) shed 0.41 percent, or 26.9 points, to 6,548.77 points.
All Shares followed with a decline of 0.64 percent, or 22.49 points, to 3,474.41 points.
Most of the sectoral indices also finished the week in the negative territory, namely Mining and Oil, 1.67 percent; Property, 1.40 percent; Industrial, 1.38 percent; and Financials, 0.21 percent.
On the other hand, Services inched up by 0.48 percent and Holding Firms by 0.33 percent.
Volume reached 1.18 billion shares amounting to PHP15.09 billion.
Decliners surpassed advancers at 112 to 68, while 46 shares were unchanged.
“Philippine stocks slid following the latest FTSE (Financial Times Stock Exchange) rebalancing and after investors digested a couple of economic reports that showed a muddy picture of the US economy,” said Luis Limlingan, Regina Capital Development Corporation (RCDC) head of sales.
Among others, US’ Labor Department reported that initial jobless claims fell by 5,000 to 213,000 as of the week ending in Sept. 10, the fifth consecutive week that the figures have slid.
Limlingan said while this report is good news, it was countered by the less-than-expected drop in import prices.
He said retail sales in the US improved after a 0.3 percent increase last August, boosted by motor vehicles and parts sales.
Manufacturing indices were mixed with the Empire State Manufacturing Index posting a -1.5 percent print, a 30-point improvement from the previous month, while the Philadelphia Fed’s index showed a -9.9 print, way below the projections of around 2.3 reading.
Brent crude oil futures also fell by 3.46 percent to USD90.84 per barrel and the West Texas Intermediate (WTI) by 3.8 percent to USD85.10 per barrel. (PNA)