Peso slides to 50.67 as stocks continue to inch up

July 6, 2017 - 6:56 PM
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File photo from the Phil. Star

MANILA – The Philippine peso slid to 50.67 to a greenback Thursday from its 50.60 finish Wednesday. But the Philippine Stock Exchange index (PSEi) increased for the second day in a row by 0.50 percent, or 39.47 points, to 7,888.31 points.

The peso weakened as minutes of the Federal Open Market Committee (FOMC) meeting on June 13-14, 2017 showed that more US monetary officials favor the reduction on the Fed’s securities holdings.

Minutes of the meetings showed that the members of the Committee had suggested several modes in gradually reducing the Fed’s debt holdings and one of these include a USD6 billion monthly ceiling for the payments of principal for maturing Treasury securities, which will be increased by USD6 billion quarterly over 12 months until it reaches USD30 billion a month.

Another option is a USD5 billion per month cap for payments of principal for agency debt and mortgage-backed securities, which will be increased by USD4 billion quarterly over a year until it reaches USD20 billion per month.

A trader said the statement released after the Fed’s meeting last June did not give clear indications on when the scaling back would happen but after the release of the minutes markets had forecast it to be within the next six months, with the earliest possible time in September.

”Any cut in the balance sheet is equivalent to a rate hike and despite the lack of hints when this would materialize investors have considered this so the dollar strengthened across Asia during the day,” the trader said.

With the release of the FOMC meeting minutes last June, probability of a Fed rate hike in December has risen to 54 percent Thursday, the trader said.

Amid these factors, the peso opened little changed against the US currency Thursday at 50.53 from 50.54 a day ago.It traded between its opening level and 50.69 resulting to an average of 50.63.

Volume of trade reached USD429.9 million, lower than the USD507 million a day ago.

The peso is expected to trade between 50.40 and 50.70 to a dollar Friday.

Meanwhile, at the Philippine Stocks Exchange (PSE), the broader All Shares rose to 4,736.85 points, up 0.51 percent or 24.15 points.

Most of the sectors also went up, led by the Holding Firms with 0.65 percent; followed by the 0.48 percent increase of the Financials.

Both the Property and the Industrial registered an uptick of 0.39 percent and the Services by 0.23 percent.

Only the Mining and Oil finished on the red with a decline of 0.16 percent.

Volume for the day reached 1.26 billion shares amounting to PHP7.5 billion.

Gainers led losers at 107 to 95 while 54 shares were unchanged.