THE peso closed Tuesday near its latest record low amid rate cut worries and the stock market fell for a third straight day as investors continued to take profits.
The currency ended the day one and a half centavos weaker at P59.455 to the greenback, near Jan. 15’s fresh low of P59.46:$1.
The benchmark Philippine Stock Market index (PSEi), meanwhile, shed 84.92 points or 1.32 percent to close Tuesday at 6,352.86.
The broader All Shares also fell, by 37.39 points or 1.03 percent, to 3,606.81.
The currency weakened to as much as P59.5 to the dollar, a new record intraday low, after opening at P59.44. Its best showing for the day was P59.42:$1.
Volume rose to $1.211 billion from $1.118 billion previously.
A trader said the peso’s depreciation remained driven by expectations of a February rate cut by the Bangko Sentral ng Pilipinas (BSP) despite slim chances of a similar move by the Federal Reserve next week.
“This weakness of the local currency might persist in view of potentially upbeat readings on US GDP (gross domestic product) and PCE (personal consumption expenditure) inflation later this week, which might solidify views of a prolonged policy hold from the US central bank,” the trader added.
Maybank Investment Banking Group economist Azril Rosli said several structural factors were likely to lead to the peso underperforming relative to regional peers, including the flood control project scandal as well as foreign sentiment.
“However, if you look on the positive side, the positive inputs are the offsetting factors, which include the BSP’s more than adequate reserve buffers, providing intervention capacity,” he told a briefing on Tuesday.
“In the near term, some dollar pullback after recent strength may provide temporary relief for the peso and allow it to avoid breaching the P60 level,” he added.
Rosli said the peso could strengthen initially but weaken in the last six months of the year.
Maybank expects the currency to hit P58:$1 in the first quarter and strengthen to P57.5 in April-June. However, it could slip back to around P59:$1 in the second half, ending the year at about P59.5.
“If the dollar enters a range-bound pattern with no strong directional move, driven by uncertainty over [the] Fed chair appointment, US economic growth strength and geopolitical tension, these situations might actually change,” Rosli said.
The PSEI’s decline, meanwhile, followed overnight weakness overseas on renewed trade worries following US President Donald Trump’s threat to impose higher tariffs on European countries that oppose his plan to purchase Greenland.
Japhet Tantiangco, research analyst at Philstocks Financial Inc., said the local market continued to retreat as investors locked in gains after the recent rally, with sentiment further dampened by the peso’s sustained weakness against the US dollar.
Trading activity remained active, however, with net value turnover reaching P6.57 billion. Foreign investors were net buyers, recording net inflows of P303.41 million.
RCBC chief economist Michael Ricafort said the index’s pullback brought it to one-week lows but described the decline as a healthy correction.
He noted that the PSEi remained at its strongest levels in over five months and continued to trade above the 6,000 level.
Ricafort said higher US Treasury yields and broader geopolitical risks, including renewed trade concerns and developments in other global hotspots, weighed on investor sentiment during Tuesday’s session.
Sectoral indices mostly ended in the red, led by property stocks that dropped 2.68 percent. Services and mining and oil were the lone gainers, rising 0.73 percent and 0.33 percent, respectively.
International Container Terminal Services Inc. gained 1.61 percent to P630.00 to lead index gainers, while Ayala Land Inc. slid 4.68 percent to P22.40, the worst performer among index stocks.
Ricafort said continued net foreign buying and expectations of possible BSP policy rate cuts could help cushion further downside risks.
