MANILA – Spike in local coronavirus disease (Covid-19) infections and uptick of domestic inflation rate resulted in the weakness of both the peso and the Philippine Stock Exchange index (PSEi) Tuesday.

The local currency finished the day at 49.54 to a US dollar from 49.381 a day ago.

It opened the day at 49.35, better than its 49.52 start in the previous session.

It traded between 49.3 and 49.55, resulting in an average of 49.406.

Volume surged to USD1.1 billion from USD609.77 million a day ago.

Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the local currency is weaker by 0.159 or 0.3 percent compared to its Monday’s finish “largely brought about by the higher than expected inflation data at 2.5 percent for the month of June 2020 after a 2.1 percent in May.”

The Philippine Statistics Authority (PSA) attributed the faster inflation rate last June to higher transportation cost, particularly of tricycle fares.

Ricafort said global oil prices registered a four-month high last June and the 10-percent tariff on imported oil and the restrictions on public transportation, as more areas remain under community quarantine, also contributed to the inflation uptick.

“Continued contraction in the latest manufacturing data and slower loan growth data could have also weighed on the peso,” he said.

Other negative pulls for the peso during the day’s trade include the net foreign selling in the local bourse, the increase in local new Covid-19 cases to over 2,000 recently, and the correction of the greenback.

The economist, however, pointed out the local currency remains among the strongest in the region for more than three years or since June 13, 2017 when it ended the trade at 49.535.

He forecasts the peso to trade between 49.40 and 49.65 against the US dollar on Wednesday.

The main equities index shed anew and ended the day at 6,267.40 points, down by 0.96 percent or 61.01 points.

All Shares followed with a 0.66 percent, or 24.34 points, drop to 3,677.83 points.

Most of the sectors also ended on the negative, led by the Property that lost 2.24 percent.

Services counter contracted by 1.29 percent, Industrial by 0.90 percent, and Holding Firms by 0.21 percent.

On the other hand, Mining and Oil gained by 0.26 percent and Financials by 0.18 percent.

Volume totaled 1.48 billion shares amounting to PHP7.6 billion.

Gainers led losers at 99 to 96, while 47 shares were unchanged.

Ricafort said the main index “corrected lower/succumbed to healthy profit-taking” but added it is “still among two-week highs, also due to the higher-than-expected inflation data as well as the relatively higher new Covid-19 cases recently.”

“Record low interest rates that could lead to some search for higher returns in the equities market and the recent gains on US/China/Asian stock markets could still support sentiment on PSEi,” he added.

He forecasts the main index’s support level on Wednesday to be at 6,100 to 6,200 levels “which still keeps the underlying upward momentum recently intact.” (PNA)