THE peso plunged to a new record low of P62.625 against the dollar on Tuesday, weakening by 3.9 centavos from a day earlier as rising oil prices weighed on market sentiment.
“As a major oil importer, the Philippines remains sensitive to higher energy prices because of their implications for inflation and the country’s import bill,” Union Bank chief economist Ruben Carlo Asuncion said.
“Near-term direction will likely remain sensitive to oil prices, Middle East developments, and Friday’s US inflation report,” he added.
The latest all-time low came just two trading days after P62.59:$1 was hit last Friday.
A trader said the currency fell on growing market expectations that the US central bank could deliver a policy rate hike next week.
“The peso might remain weak as lingering geopolitical uncertainties likewise weigh on safe-haven demand for the greenback,” the trader added.
Reyes Tacandong & Co. senior adviser Jonathan Ravelas also said that the peso was likely to remain under pressure, but added that “I do not expect a disorderly depreciation because the BSP (Bangko Sentral ng Pilipinas) has adequate policy tools and reserves to manage excessive volatility.” “Ultimately, the peso’s direction will depend more on global developments than domestic factors,” he said.
“Once we see the US dollar lose momentum, oil prices stabilize, or global risk sentiment improve, the peso should find support and gradually recover.” Philippine shares, meanwhile, recovered on Tuesday as investors went bargain hunting following the previous session’s decline, although subdued trading and negative market breadth pointed to continued caution.
The benchmark Philippine Stock Exchange index (PSEi) gained 22.31 points, or 0.37 percent, to close at 6,105.99.
“The local market advanced as investors hunted for bargains,” Philstocks Financial Inc. research manager Japhet Tantiangco, said, with buying interest in index heavyweight International Container Terminal Services Inc. providing a further boost.
Foreign investors also turned net buyers, recording net inflows of P164.54 million.
Despite the index’s advance, Tantiangco said caution remained evident in other market indicators.
Market breadth was negative, with 102 decliners to 89 gainers, while 71 issues were unchanged.
Trading was also subdued, with net value turnover reaching P4.04 billion.
Mining and oil led the gainers, climbing 2.40 percent, while financials posted the biggest decline of 0.78 percent.
