PSEi surge prompts peso to flirt with P49:$1

MANILA, Philippines — The peso closed at its strongest level in more than two years on Thursday, while the local bourse notched a fresh high in nearly three months as investors continued to cheer the economy’s emergence from stringent lockdowns.

After flirting with the P49 to a dollar level during the day, the local unit ended trading flat at P50 against the greenback, a movement enough for the currency to post its strongest level since Jan. 5, 2018 when it closed at P49.87.

Dollars traded were lower at $602.2 million from previous day’s $855.72 million.

“The peso closed stronger amid continued hefty gains in the local and global stock markets as more economies around the world further reopen their respective economies that could increase economic activities…,” Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said.

With Thursday’s trading, the peso is now trading stronger than P50-P54 average band assumed by the economic managers for the year. Central bank Governor Benjamin Diokno did not respond to request for comment.

Indeed, equity markets also traded higher with the Philippine Stock Exchange index surging 271.84 points or 4.35% to close at 6,517.49. The performance continued PSEi’s eight-day winning streak which started few days before the enhanced community quarantine in Metro Manila was lifted.

Foreign investors were net buyers of local stocks amounting to P1.37 billion, helping increase demand for pesos, which in turn buoyed the currency. “The peso is also stronger as the US dollar declined recently versus major global currencies amid improved global market risk appetite,” Ricafort added.

Apart from the National Capital Region, most of the archipelago saw one of the toughest movement restrictions eased beginning June 1 after two and a half months of closures that was meant to put the coronavirus disease-2019 (COVID-19) under control.

While the lockdowns helped slow down infections, they also shuttered businesses and dented consumption and investment activities, triggering an economic slump in the first quarter. Luis Limlingan, managing director of Regina Capital brokerage, said investors appeared convince that the virus’s damage to the economy is manageable.  

“Philippine stocks finished higher Thursday, adding to several sessions of gains as economic data pointed to less severe damage from COVID-19 pandemic than feared…,” Limlingan said in a market commentary.

More good economic data lies ahead. Prior to the release of official inflation report on Friday, Diokno told reporters “inflation continues on its downward path” this year. Inflation slowed to 2.2% in April. Apart from inflation, the government is set to report unemployment figures as of April on Friday.

Elsewhere, stock markets in Tokyo rose 0.4% and Sydney added 0.8%. Seoul went up 0.2% and Taipei ended 0.7% stronger, while Bangkok jumped more than 2 percent. — with AFP