WORRIES. Concerns on the global growth path and the inflation result in the drop of both the main equities index and the peso on Monday (Aug. 22, 2022). Investors remain to be watchful on the central bank's key policy rate decisions given the elevated inflation rate both here and abroad. (PNA file photo)
MANILA – Worries on the global growth path and rate hike decisions by central bank hit the local bourse on Monday while the peso finished at 56-level against the US dollar.
The Philippine Stock Exchange index (PSEi) shed 2.32 percent, or 159.45 points, to 6,704.41 points.
All Shares followed with a drop of 1.59 percent, or 57.64 points, to 3,577.93 points.
Holding Firms posted the biggest lost during the day after it slipped by 3.46 percent and was trailed by Property, 2.88 percent; Financials, 2.46 percent; Mining and Oil, 1.56 percent; Services, 0.57 percent; and Industrial, 0.32 percent.
Volume reached 816.98 million shares amounting to PHP5.44 billion.
Decliners surpassed gainers at 132 to 62, while 39 shares were unchanged.
“Philippine stocks dropped on rekindled rate hike fears that added concerns to the pace of the global economic recovery,” said Luis Limlingan, Regina Capital Development Corporation (RCDC) head of sales.
He said investors are on a wait-and-see stance for Federal Reserve Chairman Jerome Powell’s speech at the annual Jackson Hole economic symposium this week wherein he is expected to talk about inflation, among others.
After touching the 56-level against the US dollar mid-trade last week, the local currency closed Monday at 56.21 from 55.93 last Friday.
It opened the day at 56.1, sideway from its 55.98 close in the previous session.
It traded between 56.22 and 56.03, resulting in an average of 56.107.
Volume declined to USD804.95 million from USD889.67 million last week.
Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the peso has been affected by the general improvement of the US dollar given the hawkish statements from Fed officials, expectations for another rate increase by the Fed in September, and the latest rate hike decision of the Bangko Sentral ng Pilipinas (BSP).
He said investors are all eyes on the central banks’ policy rates decisions given the path of both the inflation and domestic growth.
For one, Ricafort said investors are closely monitoring BSP’s rate decisions to check if it would be similar to the 2004-2005 situation “when they effectively limited the upside of the US dollar/peso at 56.40 levels.”
He said investors are also considering local monetary authorities future policy rate movements “to provide greater support/stability for the peso” and on how the BSP “would further use their toolkit related to the exchange rate vis-à-vis the inflation-targeting framework since 2002 and the price stability mandate.”
This, as rate of price increases continue to increase, with the July 2022 print rising to 6.4 percent, the highest since October 2018.
BSP Governor Felipe Medalla expects domestic inflation rate to peak either in October or November this year. (PNA)
