(PNA file photo)
MANILA – The Philippine peso gained against the US dollar ahead of the long weekend holiday but the local equity market’s main index finished down after rallying for most part of the week.
The local currency appreciated to PHP57.97 from its PHP58.22 close on Thursday, which an economist said is the strongest in more than a month or after finishing at PHP57.48 on September 20.
It opened the day at PHP58.3 and traded between PHP58.35 and PHP57.82. Average level for the day stood at PHP58.047.
Volume reached USD912.35 million, lower than the previous session’s USD1.08 billion.
“The stronger peso exchange rate recently has been largely brought about by the expected seasonal increase in OFWs (overseas Filipino workers) remittances and conversion to pesos that are needed to finance travel and other holiday-related spending ahead and during the long holiday weekend as more Filipinos travel to their respective provinces/hometowns, have reunions, or take vacations during the long holiday weekend break,” Michael Ricafort, Rizal Commercial Banking Corporation chief economist, said in a statement.
He said travels from the weekend to non-working holidays October 31 and November 1 are expected to boost spending, “considering the pent-up demand after travel/tourism restrictions have been finally eased after more than two years of restrictions since the pandemic started in early 2020,” added Ricafort.
He attributed the improvement in the peso’s performance to the US dollar’s correction, partly because of softer economic data, which is seen to “potentially reduce the aggressiveness of further Fed (Federal Reserve) rate hikes in the quest to significantly bring down elevated US inflation/CPI (consumer price index) from 40-year highs recently.”
Oil futures remain on the rise but Ricafort said prices remain at its near nine-month lows.
He said this “could help narrow the country’s trade deficit/net imports from record levels in recent months and could also help ease inflationary pressures,” thus, a plus for the local currency.
When trading resumes November 2, Ricafort forecasts the currency pair to trade between PHP57.75 and PHP58.05.
On the other hand, the Philippine Stock Exchange index ended its three-day rally after it declined by 1.24 percent, or 77.15 points, to 6,153.43 points.
All Shares followed with a drop of 0.76 percent, or 25.09 points, to 3,257.29 points.
Most of the sectoral gauges also fell during the day, namely Property, 2.59 percent; Mining and Oil, 2.56 percent; Holding Firms, 1.59 percent; Services, 0.60 percent; and Industrial, 0.36 percent;
Only Financials gained during the day after rising by 0.55 percent.
Volume remained thin at 421.67 million shares amounting to PHP4.21 billion.
Decliners led advancers at 95 to 70 while 58 shares were unchanged.
Luis Limlingan, head of sales of equities firm Regina Capital Development Corporation, said the drop of the main index after its rise to the resistance level of 6,200 a day ago “seems to be a wholly technical reaction after three straight days of rallying.”
“Profit takers likely locked in gains, as it was also month-end,” he said.
He also noted the low volume during the day’s trade and ahead of the long weekend holiday and cited the fifth straight month of net foreign portfolio outflows for the country in September, amounting to USD367 million.
Relatively, he said global oil prices increased, “extending the previous day’s rally, as optimism over record US crude exports and signs that recession fears are abating outweighed concern over slack demand in China.” (PNA)
