Wed, 05 Oct 2022

Peso hits new record low, stocks slip anew

PNA
22 Sep 2022, 22:23 GMT+10

MANILA - Both the Philippine peso and the main equities index finished Thursday down, with the local unit registering a fresh all-time low, following the widely expected 75 basis points increase in the Federal Reserve's key rates.
The local currency posted another record-low against the US dollar at 58.49, erasing its record 58.00 finish on Wednesday.
It opened the day at 58.1, sideways from its 57.7 start in the previous session.
It traded between 58.5 and 58.00, resulting in an average of 58.406.
Volume reached USD1.51 billion, up from the previous session's USD1.05 billion.
Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the peso has weakened by around 14.7 percent against the US dollar after closing 2021 at 50.999 to a greenback.
He said aside from the latest Federal Reserve funds rate hike, statements for continued increases in the Fed's key rates in the coming months also hurt the local unit.
Citing reports, Ricafort said the Fed's key rates are expected to be around 4.40 percent by end-2022; 4.60 percent in 2023; 3.90 percent in 2024; and 2.90 by 2025.
He said this target increases "the attractiveness/allure of the US currency with higher interest rate income."
Ricafort forecasts the peso's next resistance level to between 58.50 to 58.75 while immediate support is seen to be around 58.00 to 58.25.
Meanwhile, the Philippine Stock Exchange index (PSEi) shed 0.63 percent, or 39.98 points, to 6,301.71 points.
All Shares followed with a drop of 0.86 percent, or 29.28 points, to 3,356.24 points.
Only the Financials finished the day with gains among the sectoral gauges after it rose by 0.69 percent.
On the other hand, Property led those that finished the day in the negative territory with a decline of 2.80 percent.
It was trailed by Industrial, 1.47 percent; Mining and Oil, 1.46 percent; Services, 0.38 percent; and Holding Firms, 0.02 percent.
Volume was thin at 641.94 million shares amounting to PHP5.92 billion.
Decliners led advancers at 156 to 41 while 34 shares were unchanged.
"Philippine shares struggled to find a footing on a rock as traders weighed another hefty rate hike from the Fed," said Luis Limlingan, Regina Capital Development Corporation (RCDC) head of sales.
The Federal Open Market Committee (FOMC), after its two-day meeting that ended on Sept. 21, announced another 75 basis points increase in the Federal Reserve funds rate to between 3 percent to 3.25 percent, the highest since 2008, to address US' four-decade high inflation rate.
Fed officials have signaled the bid to bring the key rates to a terminal rate, or the peak, of 4.6 percent by 2023.
As a result, oil futures in the global market declined by 0.9 percent to USD89.83 per barrel for the Brent crude and by 1.2 percent to USD82.94 per barrel for the West Texas Intermediate (WTI). (PNA)
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