MANILA -- The Philippine peso appreciated further Friday and the Philippine Stock Exchange index (PSEi) closed stronger a day after the Bangko Sentral ng Pilipinas (BSP) decided to hold key rates steady.
The local currency finished the day at 51.57 from its 51.645 close a day ago.
“The Peso appreciated as market players reacted to the "prudent pause" of the BSP,” BPI Research said in its daily market report.
On Thursday, BSP’s policy-making Monetary Board (MB) decided to keep the central bank’s key policy rates after noting that inflation outlook remains manageable and domestic growth remains firm.
BSP Governor Benjamin Diokno said the Board considers the slower domestic growth in the first quarter, 5.6 percent from quarter-ago’s 6.3 percent, to be temporary since it was a result of the Congress impasse that led to the delayed budget approval, which was only signed into law last April.
With these factors the peso opened the day at 51.4 from the previous session’s 51.75.
BDO chief market strategist Jonathan Ravelas said the local currency’s opening level for the day is a new high “as Philippines prefers ‘prudent pause’ to easing amid price gains.”
He was referring to the term used by Diokno regarding the MB’s decision.
“A prudent pause allows the BSP to observe and assess the impact of prior monetary adjustments including the phased reduction in the reserve requirements to be completed by the end of July,” he said.
The MB slashed universal and commercial banks’ (UKBs), thrift banks’ (TBs) and non-bank financial institutions with quasi-banking function (NBQBs) reserve requirement ratio (RRR) by a total of 200 basis points on staggered basis effective May 31, 2019 (100 basis points), June 28, 2019 (50 basis points) and July 26, 2018 (50 basis points)
RRR of demand deposits and negotiable order of withdrawal (NOW) accounts of rural and cooperative banks were, in turn, slashed by 100 basis points effective May 31, 2019.
The local currency further improved to 51.395 mid-trade but also touched 51.57. This brought the day’s average to 51.473.
Volume amounted to USD1.169 billion from the previous day’s USD829.16 million.
BPI Research forecasts the peso to trade between 51.40 and 51.70 against the greenback on Monday Similarly, the main equities index gained 0.41 percent, or 33.05 points, to 8,055.47 points.
All Shares went up by 0.75 percent, or 36.43 points, to 4,927.81 points.
Financials led the sectors with a 0.78 percent increase and was followed by Services, 0.68 percent; Industrial, 0.62 percent; Property, 0.47 percent; Holding Firms, 0.33 percent; and Mining and Oil, 0.18 percent.
Volume reached 752.3 million shares amounting to PHP9.4 billion.
Gainers led losers at 109 to 86 while 49 shares were unchanged. (PNA)
