CBC: New tax law strengthened peso

The optimism about the recently passed Tax Reform for Acceleration and Inclusion (TRAIN) Act may have tempered the dollar's appreciation against the peso.

The strengthening of the peso recently could be attributed to the newly passed tax law and the uncertainty of the US Federal Reserve's policy direction under its new chairman Jay Powell, said Cebu Bankers Club President Mario Fritz Palileo.

Palileo said the approval of the TRAIN has brought confidence in the Philippine stock market and "foreign investors were buying our stocks."

"This created demand for Philippine peso," the bank executive said.

"While on the Federal Reserve, there were not much demand for the US dollar because investors are waiting for policy directions under new Fed Chair," he told The FREEMAN.

Palileo expects the peso to remain below the P50-level in the shortterm.

As of yesterday afternoon, the peso traded at P49.769 to a dollar.

The peso ended at P49.865 versus the greenback last Friday, down 4.5 centavos from its P49.82-per-dollar finish on Thursday.

On Monday, share prices extended gains on continued optimism over the economy as the market looks to breach the 9,000-point level this year.

The Philippine Stock Exchange Index was up 0.22 percent to 8,789.23 in early trading yesterday.

The main index has rallied since the last week of 2017 after President Rodrigo Duterte signed into law the first package of its administration’s tax reform program.

The Philippine stock market is expected to continue its robust performance this year on the back of continued economic growth.

"At this point, there is no doubt that the PSE index is very strong," Marco Nino Velasco, trader at Maybank ATR Kim Eng, earlier said.

"On a longer term perspective, the main driver of the PSE is the continuing economic growth of the Philippines," Velasco added.