Peso hits P59.02:$1 intraday, PSEi falls deeper into bear market

The Philippine peso breached the P59:$1 level on Wednesday, but pared down earlier losses to close slightly stronger against the US dollar and end the five-day streak of depreciation.

The local currency appreciated by a centavo to close at P58.98:$1 after hitting an intraday low of P59.02:$1 earlier in the trading day.

This compares with Tuesday’s finish of P58.99:$1, which was the weakest showing of the peso to date.

Local economists have attributed the peso’s recent weakness to the continued policy tightening in the United States, along with concerns of a global recession.

The Federal Reserve last week hiked key policy rates by 75 basis points, and has since maintained a hawkish policy as officials have already hinted at more rate hikes.

Locally, the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) hiked policy rates by another 50 basis points, as it expects inflation to average 5.6% this year, higher than the target range of 2% to 4%.

Prior to this, it already raised rates by 50 basis points in August, 75 basis points in an off-schedule hike in July, and 25 basis points each in June and May.

“Clearly, the policy stance, the policy measures the government and the central bank have adopted certainly would be focused on managing inflation and bringing it down,” ADB Director General for Southeast Asia Ramesh Subramaniam said in a virtual press conference earlier on Wednesday.

“The domestic demand inflation, particularly the pent-up demand from the COVID-19 times clearly would have an impact in terms of pushing up inflationary pressures, but then again the financial market developments would play a leveling or neutralizing impact,” he added.

Inflation clocked in at 6.3% in August, slightly slower than the 6.4% recorded in the previous month. September data is scheduled to be released next Wednesday, October 5.

Meanwhile, local equities plunged further on Wednesday after hitting bear territory the previous session, as the market also took into consideration the higher rates.

The main PSEi lost 140.39 points or 2.33% to close at 5,879.68, while the broader All Shares index shed 68.59 points or 2.12% to 3,165.64.

More than 815.831 million shares, valued at P6.789 billion, changed hands. Decliners led advancers, 156 to 49, and 39 issues were unchanged.

“Philippine shares continued falling on climbing rates and global recession fears, with other regional indices falling deeper into the bear market,” Regina Capital Development Corporation head of Sales Luis Limlingan said in a mobile message. — BM, GMA News