MANILA – The peso fell to its 11-year low against the US dollar on Thursday while the Philippine Stock Exchange index (PSEi) bounced back after ending its three-day rally to a record-high a day ago.
The local currency shed 12 centavos and finished the day at 51.53 from 51.405 in the previous session. It is the unit’s weakest since the 51.60 finish on August 24, 2006.
A trader partly attributed it to markets’ concerns about the possible successor of Federal Reserve chair Janet Yellen – John Taylor – whom reports said US President Donald Trump has a keen eye on.
Another factor is the Fed officials’ hawkish comments that boosted expectations for a December 2017 Fed rate hike.
This, in turn, boosted further US Treasury yields that bolstered the US dollar, the trader said.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said the local unit’s performance may be due to the “rumors about a possible hawkish Fed Chairman in John Taylor.”
“(These rumors) “appeared to have spooked the market. There seems to be some nervousness in the market,” he said.
Another factor is the impact of higher dollar demand by corporates in line with their import and trade requirements, he said.
Amid these negative developments, the central bank executive said the local currency’s movement “continues to be consistent with the trend.”
“It is manageable and its impact on inflation has considerably gone down,” he said.
“In short, our latitude in allowing greater flexibility in the exchange rate has widened. When the cycle reverses, we shoud see some upward shift,” he added.
For the day, the peso opened at 51.43 from 51.37 level Wednesday.
It traded between its closing level and 51.38, resulting in an average of 51.46.
Some USD656.7 million changed hands, higher than the USD497.6 million a day ago.
Meanwhile, the PSEi recovered and rose 0.66 percent, or 55.64 points, to 8,487.37 points.
A trader said investors were quick on buying stocks that fell a day ago, thus, the rise of most of the indices.
The broader All Shares went up 0.53 percent, or 26.01 points, to 4,950.47 points.
Most of the sectors finished with gains, namely, the Financials, 1.43 percent; Holding Firms, 0.81 percent; Property, 0.54 percent; and Mining and Oil, 0.42 percent.
The Industrial and Services, however, fell 0.26 percent and 0.02 percent, respectively.
Volume for the day reached 900.43 million shares amounting to P7.88 billion.
Gainers finally led losers at 102 to 97 while 49 shares were unchanged.