MANILA – A wait-and-see stance ahead of the release of the July 2017 inflation report in the US made investors hold on to the greenback, resulting in the sideways close of the Philippine peso and the main stocks gauge Tuesday.
The peso finished the day at 50.44 from 50.35 in the previous day, which a trader attributed to investors’ decision to stay at the sidelines ahead of the release of the inflation report on August 11.
The trader said the incoming inflation report from the US would be an important factor in the future decisions of the US Federal Reserve since the rate of price increases in the world’s largest economy remained below the Fed’s two percent target.
As of end-June 2017, the 12-month average inflation in the US stood at 1.6 percent.
The Fed, in a statement issued after the meeting of its Federal Open Market Committee (FOMC) last July, said that over-all inflation, excluding volatile food and energy prices, “have declined and are running below two percent.”
“Inflation on a 12-month basis is expected to remain somewhat below two percent in the near term but to stabilize around the Committee’s two percent objective over the medium term,” it said.
These developments have resulted in the weak start for the local currency for the day at 50.42 from 50.30 in the previous session.
It traded between 50.46 and 50.32, resulting an average of 50.38 for the day.
Volume of trade went up to USD457.9 million from the previous session’s USD428.9 million.
The currency pair is seen to trade between 50.20 and 50.40 Wednesday.
The Philippine Stock Exchange index (PSEi) ended its three-day rally after it shed 0.07 percent ,or 5.76 points, to 7,986.51 points.
Also, the broader All Shares index declined by 0.39 percent, or 18.72 points, to 4,734.64 points.
Half of the sectors tracked the main index and these include the Industrial, Mining and Oil, and Holding Firms, which fell 1.50 percent, 0.79 percent, and 0.68 percent, respectively.
On the other hand, Financials rose by 0.65 percent, Property by 0.54 percent, and Services by 0.45 percent.
Volume for the day reached 1.11 billion shares amounting to P8.6 billion.
Losers led gainers at 138 to 60 while 51 shares were unchanged.