Peso Keeps Ground Vs USD; PSEi Slips Anew

An anticipation of a 0.2 percent hike in US inflation rate for February 2018 failed to greatly affect the Philippine peso unlike the Philippine Stock Exchange index (PSEi).

The local currency finished Wednesday at 52.07 from 52.04 a day ago.

A trader said expectations for a rate hike after the Federal Open Market Committee (FOMC) meeting from March 20-21 intensified but noted that the peso remained intact given the developments in the domestic economy.

The Bangko Sentral ng Pilipinas’ (BSP) policy-making Monetary Board (MB) will have its rate setting meet on March 22, its second for the year, and analysts have been projecting the Board to also start its tightening move given the rise of domestic inflation rate.

Rate of price increases went up to 3.9 percent in the second month this year from last January’s 3.4 percent, using the rebased year of 2012. Year-ago inflation rate is lower at 3.7 percent.

Using the 2006 base year, inflation rose to 4.5 percent from four percent last January, thus, exceeding the government’s two to four percent target for 2017-19.

Philippine Statistics Authority (PSA) shifted to a new base year starting with the February 2018 figures.

The higher inflation rate was traced primarily to faster increases in the prices of the heavily-weighted food and non-alcoholic beverages as well as the alcoholic beverages, with the latter due to more efficient tax collection and the former to increase in excise taxes on sugar-sweetened beverages and on oil due to the tax reform.

With BSP also seen to hike rates as early as this month, the trader said the peso was able to remain strong.

For the day, the unit opened at 52.06, little changed from 52.00 a day ago.

It improved to 52.02 mid-trade but also touched 52.12 during the day resulting to an average of 52.05.

Volume for the day reached USD500.35 million, up from the USD359.8 million.

On the other hand, the PSEi shed for the second day in a row and ended the day at 8,348.74 points, down 0.84 percent or 70.83 points.

All Shares tracked the main index and lost 0.62 percent, or 31.31 points, to 5,035.85 points.

Services posted the highest decrease at 1.74 percent followed by the Holding Firms, 0.93 percent; Financials, 0.84 percent; and Property, 0.53 percent.

Mining and Oil and Industrial, meanwhile, managed to post gains and rise by 0.81 percent and 0.06 percent, respectively.

Volume reached 6.59 billion shares amounting to PHP7.5 billion.

Losers led gainers at 122 to 99 while 40 shares were unchanged. (PNA)