Peso back at P55 level vs USD, stocks surge
By Lee C. Chipongian and James A. Loyola
The local stock market surged to the 6,800 level as investors were fired up by upbeat economic data and corporate earnings here and in the US while the local currency returned to P55 level versus the greenback, at the close of trading on Wednesday, Feb. 7.
The peso appreciated at the ₱55 range last week before falling back to the ₱56 territory.
The local currency closed at ₱55.95 versus the US dollar from ₱56.2 the day before. The exchange rate opened at ₱56.08 and closed at its strongest at ₱55.95.
Based on Bankers Association of the Philippines (BAP) data, the spot market volume was steady at $1.294 billion from $1.259 billion last Tuesday.
On Wednesday, the peso’s weighted average rate was at ₱56.033 from ₱56.261.
Market analysts said the central bank’s hawkish stance or tightening bias has helped stabilized the peso below ₱57 for months.
The Bangko Sentral ng Pilipinas' (BSP) policy-making arm, the Monetary Board, is scheduled to meet on Feb. 15 for its first policy rate meeting for the year. The market expects the BSP to not do anything and keep the key rate at 6.5 percent.
The Monetary Board decision to raise the key rate in an off-cycle move last Oct. 26, 2023 has given the market more confidence that the peso will remain resilient versus the strong US dollar.
The BSP has always emphasized that it has a flexible and free-floating exchange rate policy, which means it is market-determined. However, it is prepared to participate in the exchange rate market to ensure orderly market conditions and to reduce excessive short term volatility.
Meantime, the local stock market surged to the 6,800 level as investors absorbed market-moving economic data.
The bellwether PSEi jumped 74.78 points or 1.11 percent to close at 6,830.04 as the Services sector continued to lead the rally with only the Mining and Oil counter dropping.
Volume improved to 829.44 billion shares worth ₱6.32 billion as gainers outpaced losers 112 to 80 with 49 unchanged.
”Buying enthusiasm continued in the local bourse on the back of a better-than-expected January inflation print,” said Regina Capital Development Corporation Managing Director Luis Limlingan.
He added that “sentiment was also lukewarm overseas as investors parse through another slate of quarterly results halfway through the corporate earnings season.”
Philstocks Financial Assistant Research Manager Claire Alviar said, “the local bourse gained amid favorable local economic figures. Recently, PSA reported a robust labor market, with the unemployment rate dropping to 3.1 percent. In addition, the inflation rate in January printed at the bottom of the BSP forecast range while the GDP growth in fourth quarter of 2023 met expectations.”
“Moreover, positive cues from the US markets, driven by strong corporate earnings, coupled with the expectation of an interest rate cut by the Federal Reserve, boosted the sentiment further,” she noted.