Peso hits near 4-year high of P48.57 to $1; stocks dip

Peso hits near 4-year high of P48.57 to $1; stocks dip

MANILA – The Philippine peso rose to its strongest in nearly four years against the US dollar after quarantine restriction in the National Capital Region (NCR), among other areas, was eased but the main equities index shed.

The local currency finished the day at 48.575 from its 48.625 close to US dollar Tuesday.

It opened the day at 48.61, sideways from its 48.66 start in the previous session.

It traded between 48.61 and 48.525, resulting in an average of 48.561.

Volume totaled to USD794.5 million, lower than USD875.4 million a day ago.

Michael Ricafort, Rizal Commercial Banking Corporation chief economist, said the peso closed at its strongest since November 4, 2016, when it finished the trade at 48.48 to the US dollar.

He attributed the risk-on sentiment partly to the reverting of NCR, Bulacan, Laguna, and Cavite’s movement restriction to general community quarantine (GCQ) effective Wednesday, after a 15-day imposition of the modified enhanced community quarantine (MECQ).

The easing of restriction “helps improve economic recovery prospects and investment valuations,” he added.

Ricafort said the US dollar is also generally weaker against other currencies in more than two years due to less demand for the US currency as a safe haven asset because of the improvement in global market risk appetite.

He said the peso is also strengthening against the US dollar in the past few weeks because of slower importation due to the quarantine measures that hampered economic activities.

Ricafort forecasts the peso to trade between 48.45 to 48.60 against the greenback on Thursday.

Meanwhile, the Philippine Stock Exchange index (PSEi) declined Wednesday after recovery the previous day.

The PSEi lost 1.86 percent, or 114.33 points, to 6,042.12 points.

All Shares followed with a drop of 1.22 percent, or 44.42 points, to 3,591.36 points.

Most of the sectoral gauges also finished the day on the red, led by Property, which fell 2.54 percent.

It was trailed by Holding Firms counter, 2.19 percent; Mining and Oil, 1.54 percent; Financials, 1.45 percent; and Industrial, 1.37 percent.

Only the Services index gained during the day after it rose by 0.70 percent.

Volume totaled to 1.36 billion shares amounting to PHP5.47 billion.

Decliners surpassed advancers at 95 to 92, while 42 shares were unchanged.

Ricafort traced the drop in the main equities index to “correction” but noted the PSEi’s close is “still near one-month highs (since June 23, 2020), after hefty gains over the past two weeks in anticipation for the easing of the MECQ to GCQ effective today in Metro Manila and nearby areas.”

He said the announcement last week by Russian President Vladimir Putin about the availability of the first vaccine against the coronavirus disease (Covid-19) also boosted market sentiments.

“The ghost month in East Asian markets could have also partly triggered the healthy profit-taking at the PSEi,” he said.

The main index is projected to range between 5,850 to 5,990 levels on Thursday, “which helps keep intact the underlying upward trend/momentum since early August 2020.” (PNA)

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