MANILA – The peso closed Friday sideways against the US dollar but still on its strongest in over three years, while the Philippine Stock Exchange index (PSEi) ended its three-day rally.
The local currency finished the day’s trade at 49.041 from 49.05 in the previous day.
It opened the day at 49.072 from the previous session’s 49.06.
It traded between 49.105 and 49.041, resulting in an average of 49.082.
Volume totaled to USD647.4 million, higher than the USD587.1 million Thursday.
Michael Ricafort, Rizal Commercial Banking Corporation (RCBC) chief economist, said the peso ended the week at its strongest finish since November 11, 2016 when it closed the trade at 48.95 to a US dollar.
He said the weaker domestic output in the second quarter of this year and the 14-day modified enhanced community quarantine (MECQ) in the National Capital Region (NCR) and four nearby provinces supported the local currency by way of lower imports thus, lower demand for the greenback.
Ricafort said the government’s retail treasury bond (RTB) offer, which ended Friday, also supported the local currency as it may have attracted some foreign investors “thereby partly supporting the peso exchange rate recently.”
He also cited the improvement in global market appetite, optimism for another US coronavirus disease 2019 (Covid-19) stimulus program, better US jobless claims data, developments on the ongoing studies for a possible Covid-19 vaccine, and general dollar weakness due to US-China tensions.
Ricafort forecasts the peso to trade between 48.90-49.20 against the greenback next week.
Meanwhile, the main equities index shed 0.96 percent, or 56.56 points, to 5,846.02 points.
All Shares trailed with a 0.52 percent, or 18.08 points, drop to 3,467.53 points.
Financials, Holding Firms, and Property counters declined by 1.85 percent, 1.56 percent, and 1.36 percent, respectively.
The Mining and Oil counter rose by 2.46 percent, Services by 1.70 percent, and Industrial by 0.56 percent.
Volume totaled 5.27 billion shares amounting to PHP10.92 billion.
Gainers led losers at 113 to 82, while 46 shares were unchanged.
Ricafort said the main equities index posted a correction in line with its counterparts in Asia and Europe “amid increased tension between US and China lately.”
“The financial markets appeared to have already priced in the 16.5 percent year-on-year decline in 2Q 2020 GDP (gross domestic product) data that was announced yesterday,” he said.
He added the PSEi declined for the fifth straight week by 82.43 points or 1.4 percent while it has lost 1,969.24 points or 25.2 percent since the start of the year “as this more or less may reflect some market expectations on the estimated declines in the net income/results of some listed companies for 2020 vs. in 2019 due to Covid-19 lockdowns/pandemic.”
Ricafort projects the PSEi’s resistance level next week to be around 6,000-level.
Among the factors that will affect the index are the trend in new coronavirus disease (Covid-19) cases, authorities’ decision on the quarantine level for NCR and nearby provinces, and the foreign reserves data, he added. (PNA)
