Stocks advance; peso dips to 57.78 a dollar
STOCKS rose, but the Philippine peso fell to a new 17-month low of 57.78 against the US dollar Thursday as investors sought the safety of the greenback amid global concerns.
Regional currencies were generally weaker against the US dollar in recent days, with the Japanese yen falling to a three-decade low of 155 per dollar.
Investors were preparing for the release of key US inflation data Friday that could have a bearing on the Federal Reserve’s plans for cutting interest rates ahead of its meeting next week.
The Philippine peso tumbled to 57.78 a dollar from 57.55 on Wednesday, with analysts pointing to the general strength of the greenback on expectation the Fed would delay its interest rate cuts.
The Bangko Sentral ng Pilipinas earlier also said that the peso’s recent decline was due to the strength of the dollar amid expectations that the US Federal Reserve will not be cutting interest rates anytime soon.
Last week, Fed Chairman Jerome Powell said persistently elevated inflation will probably delay any Fed interest rate cuts until later this year.
“If higher inflation does persist,” he said, “we can maintain the current level of [interest rates] for as long as needed.”
A weaker peso is seen as favoring exporters as prices of Philippinemade goods become cheaper and more attractive to international buyers. Families of overseas Filipinos who rely on dollar remittances are also expected to benefit as they get more pesos per dollar.
Importers however are at a disadvantage as import costs rise, especially for commodities like oil and other fuels.
Meanwhile, the Philippine Stock Exchange index inched up by 2.13 points, or 0.03 percent, to close at 6,574.88, while the broader all-shares index advanced 4.51 points, or 0.13 percent, to reach 3,467.97.
Regina Capital Development Corp. head of sales Luis Limlingan said investors were waiting for more positive cues.
“Philippine share consolidated as investors awaited more leads before testing the 6,600 psychological resistance,” Limlingan said.