Stocks fall, peso hits 9-month high on BSP interest rate hike

STOCKS fell while the peso advanced to a nine-month high Thursday, ahead of the Bangko Sentral ng Pilipinas’ decision to raise the overnight borrowing rate by another 25 basis points.

The PSE index, the 30-company benchmark of the Philippine Stock Exchange, shed 9 points, or 0.15 percent, to close at 6,536.36 as five of the six subsectors registered losses.

The broader all-share index also dropped 7 points, or 0.21 percent, to settle at 3,492.77 on a value turnover of P3.69 billion. Losers outnumbered gainersk 98 to 56, while 62 issues were unchanged.

Four of the 10 most active stocks ended in the green, led by Globe Telecom Inc. which rose 0.54 percent to P1,848.00 and Ayala Land Inc. which gained 0.53 percent to P28.35.

The peso appreciated to a nine-month high against the greenback following the expected 25-bps hike in policy rate to 6.25 percent and the reduced inflation forecast for 2023 and 2024.

The peso closed at 54.27 against the US dollar, stronger than 54.5 on Wednesday. It was its strongest finish since it settled at 54.265 on June 21, 2022.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the latest move of the Monetary Board helped stabilize the peso. “The peso also became stronger after the latest reduction in the BSP inflation estimates to 6 percent for 2023 from the previous estimate of 6.1 percent, and 2.9 percent for 2024 from 3.1 percent,” he said.

Ricafort said the peso also appreciated after global crude oil prices declined to linger among 15-month lows since Dec. 21, 2021 that could further help ease inflationary pressures and narrow the country’s trade deficit.

Meanwhile, Asian markets mostly rose Thursday and the dollar retreated, brushing off a Wall Street fall on hopes the Federal Reserve’s latest interest rate hike would be one of its last.

The gains came even as the US central bank’s chief Jerome Powell dealt a blow to hopes it could cut borrowing costs later in the year to soothe banking sector fears.

Recent turmoil caused by the collapse of two US lenders and the takeover of Credit Suisse had fanned speculation central banks would pause their inflation-fighting monetary tightening campaign.