MANILA – Anticipation of rate cuts in several countries, including the Philippines, allowed the peso to close at the 50-level to a US dollar Tuesday but the main equities index dropped a day after posting a big jump.
The local currency ended its 18-month high to a greenback at 50.90 from its 51.00 close a day ago. It ended at 50.84 on January 26, 2018.
Union Bank of the Philippines (UnionBank) chief economist Ruben Carlo Asuncion said that aside from rate cut expectations, the “flurry of recent economic releases such as OFW (Overseas Filipino Workers) remittances and low domestic inflation is also driving this strength.”
“The trend is expected to continue once the August inflation and GDP numbers are released,” he said.
The economist eyes the peso to trade between 50.70 and 51.00 to a US dollar on Wednesday.
On Monday, the Bangko Sentral ng Pilipinas reported that inflows from Filipino workers abroad rose by 5.5 percent last May to USD2.9 billion while it increased by 4.1 percent in the first five months this year to USD13.7 billion.
Relatively, the rate of price increases slowed to 2.7 percent last June after it unexpectedly rose to 3.2 percent in the previous months.
It was on a sustained downtrend after peaking at 6.7 percent in September to October last year until the rise last May. BSP officials have said that they expect inflation to average at 2.7 percent this year.
With these factors, the peso opened the day at 51.00, lower than the 51.155 start in the previous session.
It traded between 51.00 and 50.88, resulting to an average of 50.944.
Volume surged to USD1.045 billion from the previous day’s USD744.96 million.
On the other hand, the Philippine Stock Exchange index (PSEi) fell 1.22 percent, or 101.72 points, to 8,263.57 points.
All Shares contracted by 0.61 percent, or 30.97 points, to 5,012.99 points.
Most of the sectors ended the day on the red, with Services registering the highest decline at 1.91 percent. It was followed by Property, 1.65 percent; Industrial, 1.21 percent; and Holding Firms, 0.86 percent.
Mining and Oil and Financials, on the other hand, rose by 3.70 percent and 0.26 percent, respectively.
Volume reached 1.21 billion shares amounting to P10.49 billion.
Advancers led decliners at 121 to 85 while 48 shares were unchanged. (PNA)