MANILA — Expectations of an additional hike in the Bangko Sentral ng Pilipinas’ (BSP) key rates boosted the peso Tuesday but uncertainties pulled down the Philippine Stock Exchange index (PSEi).
The local currency gained PHP0.19 to the greenback after finishing the day’s trade at 53.025 from the previous day’s 53.22, which a trader attributed to October’s flat inflation rate at 6.7 percent.
Although last month’s inflation figure indicates that price pressures have eased, some economists project further hikes in the central bank’s key policy rates in the remaining months of 2018, to help anchor inflation expectation.
This, the trader said, is the main reason for the strengthening of the peso.
For the day, the local currency opened at 53.21 from the previous session’s 53.27.
Its closing level is the local unit’s strongest for the day while the weakest is at 53.26, resulting in an average of 53.147.
Volume reached USD983.78 million, higher than the USD742.25 million a day ago.
The currency pair is seen to trade between 53.00 and 53.20 on Wednesday.
On the other hand, the main stock gauge was pulled down by continued uncertainties overseas, such as the pending result of the US’ midterm elections, which is expected to be released Wednesday.
The PSEi shed 0.46 percent, or 33.33 points, to 7,180.11 points.
Astro del Castillo, president and managing director of finance and investment company First Grade Finance, Inc., also cited the latest domestic inflation print as another factor for investor uncertainties.
He said that while the October rate of price increases is flat, some analysts are still not convinced that inflation has really peaked. “It is not really a disappointment but some said it could still trek higher so people are playing it safe,” he told the Philippines News Agency (PNA) in an interview.
Thus, some investors decided to take some gains following the recent uptrend at the PSEi, he said.
Another factor that made investors stay on the sidelines is the issue of oil supply, following US sanctions on Iran.
Amid the drop of the PSEi, del Castillo said “it is healthy for the market to consolidate at this level.”
The decline of the main index was followed by All Shares after it dropped by 0.44 percent, or 19.37 points, to 4,372.08 points.
It was a mix among the sectors, although most finished on the red.
Property registered the highest decline at 2.68 percent and was trailed by the Services, 0.79 percent; Industrial, 0.12 percent; and Financials, 0.10 percent.
On the other hand, Mining and Oil rose by 1.45 percent, and Holding Firms by 0.78 percent.
Volume reached 1.15 billion shares amounting to PHP6.76 billion.
Losers led gainers at 103 to 82 while 52 shares were unchanged. (Joann Villanueva/PNA)
