The Philippine peso ended Friday sideways against the US dollar due partly to record-high foreign exchange reserves of the country while the main equities index slipped after a two-day rally.
The local currency ended the week at 48.625 against the greenback, sideways from its 48.68 close a day ago.
It opened the day at 48.63 and traded between 48.65 and 48.61. The average level for the day stood at 48.634.
Volume totaled to $587.75 million, lower than the $829.01 on Thursday.
Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort attributed the peso’s performance partly to the rise of the country’s gross international reserves (GIR) to $100.5 billion as of September, which, he said, “fundamentally provide greater support/cushion/buffer for the peso especially vs. any speculative attacks.”
Other supporting factors include investors’ wait-and-see stance on the ongoing deliberations for the proposed P4.5-trillion 2021 national budget and the government’s decision to further ease quarantine restrictions.
Ricafort said the local unit has appreciated to date by about P2.01, or 4 percent, against the US dollar and forecasts it to improve to between P48.00 to P48.25 in the coming weeks, partly to the seasonal rise of remittance inflows during the holidays.
On the other hand, the Philippine Stock Exchange index (PSEi) shed 0.67 percent, or 39.86 points, to 5,898.47 points.
All Shares also ended the week’s trade on the red with a drop of 0.10 percent, or 3.71 points, to 3,581.91 points.
It was a balance among the sectoral indices, with half tracking the main index and the other half posting gains.
Holding Firms contracted by 1.48 percent, Services by 0.78 percent, and Financials by 0.37 percent.
On the other hand, Mining and Oil surged by 10.79 percent, Industrial rose by 0.61 percent, and Property up by 0.24 percent.
Volume totaled to 4.89 billion shares amounting to P5.64 billion.
Advancers led decliners at 118 to 89 while 46 shares were unchanged.
Ricafort attributed the main equity index’s performance to anxieties on the outcome of the House of Representatives’ four-day special budget session, which ends this Friday, as well as the delay in the discussions on the proposed stimulus package in the US ahead of the November 3 presidential elections.
Other factors are the “risk of a no-deal Brexit in view of the deadline set by the United Kingdom this week for the trade deal with the European Union, the spike in new coronavirus disease 2019 (Covid-19) cases to new record highs that led to restrictions in some European countries with risk of new lockdowns/stay-at-home orders that could lead to slower global economic growth and valuations,” Ricafort said.
PSEi has contracted by 24.5 percent since the start of the year and Ricafort said “this may reflect market expectations of a similar decline in the results of some listed companies largely due to Covid-19.”
He said the main index’s “strong support has been seen at the 5,700-5,800 levels, while immediate resistance remains at 6,000-6,100 levels.”
“For the coming weeks/months, any further easing/relaxation of the quarantine standards in Metro Manila (from the current GCQ (general community quarantine), to MGCQ (modified general community quarantine) would help support faster pace of economic recovery as well as valuations,” he added. (pna.gov.ph)