THE peso markedly strengthened, and the stock market peso also surged on news that the US and Iran would be signing a peace deal expected to ease pressures on global oil prices.
The currency gained 87 centavos and closed at P60.48:$1 while the benchmark Philippine Stock Market index (PSEi) jumped 6.14 percent, or 363.50 points, to end Monday at 6,272.88.
SM Investment Corp. chief economist Robert Dan Roces said the currency could remain in the P60:$1 level, which it last hit on May 7, with further appreciation possible if markets continue to unwind risk premiums associated with the war in the Middle East.
“The peace deal helps through lower oil prices and a softer dollar,” he said.
“As for P59 (to the dollar), that’s not impossible, but it would likely take more than geopolitics alone, as the broader direction of the dollar will matter just as much.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the peso also strengthened after the global crude oil prices declined to $80 per barrel.
Philstocks Financial Inc. research manager Japhet Tantiangco said the prospect of lower oil prices buoyed expectations for a more favorable inflation environment.
Luis Limlingan, head of sales at Regina Capital Development Corp., said the agreement triggered a strong shift in investor sentiment.
“The local bourse ended significantly higher after the US and Iran reached an agreement and announced the end of the Strait of Hormuz blockade, easing geopolitical concerns,” he said.
“The development triggered strong buying pressure, making the local index one of the top gainers in the region. Meanwhile, improved risk sentiment also supported the peso, leading to appreciation against the greenback,” he added.
The stock market rally was broad-based, with all sectoral indices ending in positive territory and banks leading the charge with a 9.04-percent surge.
Investor sentiment improved after reports that Washington and Tehran would sign a peace deal on June 19, effectively ending tensions that had disrupted global energy markets for months.
The agreement is also expected to result in the reopening of shipping routes through the Strait of Hormuz, easing concerns over oil supply disruptions.
Trading activity was robust, with value turnover reaching P11.38 billion, nearly double recent averages. Foreign investors were also aggressive buyers, posting net inflows of P1.03 billion.
Market breadth reflected the strong optimism, with 144 gainers outpacing 58 decliners, while 43 stocks were unchanged.
NAZYLEN JOY MABANGLO,
NIÑA MYKA PAULINE ARCEO
