MANILA-- The local equities market registered mixed performance Tuesday but the Philippine peso continues to be injured by the sustained strength of the US dollar.
The Philippine Stock Exchange index (PSEi) posted a 0.02 percent, or 1.49 points, rise to 7,282.68 points, which a trader said was a good output despite the volatilities in the global financial market.
The trader said foreign selling was up in the local stock exchange as US Treasuries' yields continued to trek ahead of Wednesday's release of the minutes of the Federal Open Market Committee (FOMC) meeting last January.
On the other hand, All Shares contracted by 0.08 percent, or 3.41 points, to 4,404.59 points.
Most of the sectors ended the day with increases, led by the Mining and Oil with 11 percent rise; followed by the Holding Firms, 0.36 percent; Property, 0.11 percent; and Industrial, 0.08 percent.
Services and Financials, meanwhile, fell by 0.72 percent and 0.63 percent, respectively.
Volumes of shares churned reached 1.83 billion amounting to Php 5.73 billion.
Losers led gainers at 111 to 85 while 48 shares were unchanged.
The local currency ended almost unchanged at 50.25 from Monday's 50.23 finish. This is the unit's weakest after the 50.32 close on Sept. 26, 2006.
Because of volatilities, the local currency opened at 50.30, a big drop from the 50.08 in the previous day.
It recovered to 49.28 mid-trade but also dipped to 50.35 resulting in an average of 50.30.
Volume of trade reached USD581.5 million, lower than the USD723 million in the previous session.
A trader expects the currency pair to trade between 50.10 and 50.30 Wednesday.
Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. disclosed that based on the central bank's surveillance "there is market demand to service legitimate dollar requirements and that's moving the market."
He said some market participants were also positioning in terms on their outlook on the greenback.
"These are normally part of a healthy vibrant market. But this is not to say that we will stand back when we see that the movements are disruptive or excessive," he added.
BSP Deputy Governor Diwa Guinigundo said the local currency "continues to adjust to the uncertainty mostly in the global financial markets."
He explained that "while global economic recovery is a work in progress, the fallout from the US Fed interest rate hike and the populist sentiment in Europe could dent market sentiment and with it bring down regional currencies including the peso."
Guinigundo said there were also some domestic factors affecting the local currency such as the deficit in external payments position in January but pointed out that "for me this is episodic."
On Monday, the central bank reported that the country's balance of payment (BOP) position in the first month this 2017 registered a USD9 million deficit, lower than month-ago's USD420 million and year-ago's USD813 million. This was the fourth consecutive month that the BOP position ended at a deficit.
Guinigundo, on the other hand, pointed out that the external payments position of the country "is one of 12 data points for 2017 in which we expect some rebound from the small deficit in 2016."
He stressed that "looking ahead, we continue to see the resiliency of the economy even as imports for infrastructure and power resurge."
"Public spending in all likelihood supported by higher revenues and the proposed tax reform will buttress domestic demand and keep the growth momentum," he said.
Guinigundo said the foreign exchange rate in the country was "no different" from other economic factors vis-A�-vis the effect of external developments.
"Under an independent float, the peso will reflect market volatilities but at the end of the day will be supported by our robust macrofundamentals," he said, citing that these fundamentals are also boosted by resilient remittances and the continued rise of business process outsourcing (BPO) sector revenues.
"The BSP will keep its eye on the ball and its feet on the ground," he added.
Economist Victor Abola said the latest weakness of the peso is due to strong demand for the US dollars "as the economic growth has been accelerating."
"Besides, the US has been performing well and investors are putting some money in dollar assets," he said.
He, however, said that resiliency of the local currency remains, thus, "what BSP is trying to tell banks is not to speculate and add to the pressure on the peso." (PNA)
Source: Philippines News Agency