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PSEi slips after Fed rate hike decision; peso strengthens

By Joann Villanueva

March 23, 2023, 8:13 pm

<p><strong>FED RATE HIKE</strong>. The negative close of the local bourse's main index on Thursday (March 23, 2023) has been attributed to the widely-expected hike in the Federal Reserve's key rates. The rate hike resulted in the weakening of the US dollar, which benefited the peso after it gained against the greenback. <em>(PNA graphics)</em></p>

FED RATE HIKE. The negative close of the local bourse's main index on Thursday (March 23, 2023) has been attributed to the widely-expected hike in the Federal Reserve's key rates. The rate hike resulted in the weakening of the US dollar, which benefited the peso after it gained against the greenback. (PNA graphics)

MANILA – The within-expected hike in the Federal Reserve’s key rates resulted in the negative close of the local bourse’s main index on Thursday but the peso gained against the United States dollar.
 
After a two-day winning streak, the Philippine Stock Exchange index (PSEi) shed 0.15 percent, or 9.91 points, to 6,536.36 points.
 
All Shares also ended in the negative territory after dipping by 0.21 percent, or 7.2 points, to 3,492.77 points.
 
Most of the sectoral indices also declined – Services, 0.48 percent; Industrial, 0.32 percent; Financials, 0.25 percent; Holding Firms, 0.06 percent; and Property, 0.002 percent.
 
Only the Mining and Oil index gained during the day after it rose by 0.37 percent.
 
Volume reached 428.16 million shares amounting to PHP3.7 billion.
 
Decliners led advancers at 98 to 56 while 62 shares were unchanged.
 
Luis Limlingan, Regina Capital Development Corp. head of sales, said aside from the 25 basis points increase in the Federal Reserve rates, investors also took note of the indications that the Fed’s move to fight the US’ elevated inflation rate is nearing its end after the removal of the words “ongoing increases” from the post-meeting statement.
 
After the two-day meeting that ended on March 22, the Federal Open Market Committee (FOMC) increased the Federal Reserve’s key rates between 4.75 percent and 5 percent.
 
This development, which weakened the US dollar, resulted in the rise in the prices of oil in the international market to USD76.69 per barrel for Brent crude oil and USD70.90 per barrel for the West Texas Intermediate.
 
Meanwhile, the peso gained against the greenback and finished the day at 54.27 from Wednesday’s 54.5.
 
It opened the day at 54.38 and traded between 54.595 and 54.27, averaging 54.451.
 
Volume reached USD1.14 billion, lower than USD1.4 billion during the previous day.
 
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the local currency ended the day at its lowest since Feb. 3, when it closed at 53.68, partly due to the cut in the Bangko Sentral ng Pilipinas’ (BSP) average inflation projections for this and next year.
 
After the meeting of its policy-making Monetary Board on Thursday, the BSP announced that its 2023 average inflation forecast was reduced from 6.1 percent to 6 percent while that for 2024 from 3.1 percent to 2.9 percent.
 
Ricafort said the weakening of the US dollar, due in part to another hike in the Federal Reserve’s key rates, also contributed to the peso’s strength.
 
For Friday, the local currency is expected to trade between 54.20 and 54.40. (PNA)
 

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