Stocks decline, peso weakens to 50 vs dollar
Financial markets ended the week on a losing streak with the peso closing at 50 to $1 due to uncertainties brought about by the possibility of another increase in US interest rates as well as strong demand from importers.
At the Philippine Stock Exchange (PSE), the main composite index fell 0.52 percent, or 38.46 points, to close at 7,244.79, while the broader All Shares index declined 0.31 percent
or 13.78 points to settle at 4,388.01. “Markets resorted to profit taking after Thursday’s bargain hunting as US stocks managed to eke out small gains as the major stock averages overcame a sense of rally fatigue to consolidate their run to all-time record highs,” Regina Capital Development Corp.’s Luis Limlingan said. The local currency shed three centavos after opening stronger at 49.94 to $1 from Thursday’s 49.97 to $ 1. This was the currency’s weakest level since the peso closed at 50.09 to $1 on Nov. 15, 2006.
Aside from uncertainty of another rate increase by the US Federal Reserve next month, BSP Deputy Governor and officer- in- charge Diwa Guinigundo also attributed the weakening of the peso against the dollar to the strong demand for dollars from corporations.
“Still the same story of external market uncertainty. And despite market uncertainty about a March US Fed interest rate hike, there was higher demand from corporates today. This drove the peso to touch the 50 to a dollar level,” Guinigundo said.
“We continue to see negative market sentiment dominating the strong fundamentals. We should see financial markets reacting to news that overseas Filipino remittances remain resilient and growth prospects remain very positive on the back of strong consumption, investment and public expenditures,” he said.
Meanwhile, local counters were covered in red, except for financials which posted a slight 0.02 percent increase.
The rest finished at a loss, with services recording the biggest drop of 1.31 percent.
Market breadth was negative with decliners edging out advancers, 99 to 93, while 48 stocks did not change. Value turnover stood at P6.99 billion.
Traders said investors continued to await more pronouncements from the US Federal Reserve after raising the possibility of three rate hikes this year.
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