Peso, stocks weaken anew

Lawrence Agcaoili, Iris Gonzales - The Philippine Star
Peso, stocks weaken anew
The broader All shares gauge was also down by 36.62 points, or 0.80 percent, to finish at 4,494.90.

MANILA, Philippines — Financial markets suffered heavily yesterday, with the benchmark Philippine Stock Exchange index (PSEi) plunging by 101.44 points, or 1.36 percent, to end at 7,332.17, and the peso weakening by another eight centavos to settle at 54.31 to a dollar.

The broader All shares gauge was also down by 36.62 points, or 0.80 percent, to finish at 4,494.90.

Total value was thin at P3.495 billion and market breadth was negative, 99 to 81 while 55 issues were unchanged.

Astro del Castillo, managing director at First Grade Finance Inc. said concerns on the US-China trade war have resurfaced.

 “Renewed concerns on the trade spat between US and China was felt in our local market. Higher oil prices in the crude market added to the selling pressure,” he said.

Moving forward, del Castillo said the index is expected to consolidate within the 7,000 to 7,500 range as more red flags are seen in the horizon.

Traders said investors would also be keeping a close watch on the meeting of the Bangko Sentral ng Pilipinas (BSP) on Thursday when monetary authorities are expected to take a stronger stance of 50 basis points to address rising inflation which hit 6.4 percent in August.

Yesterday’s closing rate of the peso was the weakest level for the local currency since closing at 54.425 to $1 in Nov. 22, 2005. It is the third weakest currency in the region after the Indian rupee and Indonesian rupiah, shedding more than eight percent since the start of the year.

 “It can be attributed to safe-haven buying amid escalating US-China trade tension after both countries imposed more tariffs on each other. There is also widespread expectation of another rate hike from the US Federal Reserve,” Land Bank of the Philippines market economist Guian Angelo Dumalagan said.

Investors continued to turn to other safe-have assets such as US treasuries and currencies including the Japanese yen due to expectations of more hikes by the US Fed.

In the domestic front, economists expect the BSP to deliver another 50 basis point hike during the rate setting meeting of the Monetary Board tomorrow.

The BSP has raised interest rates by 100 basis points to rein in inflationary expectations as the consumer price index averaged 4.8 percent in the first eight months of the year after leaping to its highest level in nine years to 6.4 percent in August from 5.7 percent in July.

Dumalagan said the peso is seen remaining above the 54 to $1 level. It opened weaker at 54.245 and hit an intraday low of 54.5.

 “The exchange rate may move within the 54. 20 to 54.40 range,” he added.

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