MANILA—Upsurge of the Philippine peso continued Tuesday after the local currency closed to its almost two-month high against the greenback, given the foreign capital flows to the local equities market.
The peso finished the day’s trade at 49.63, its highest after the 49.98 last Jan. 12, from 49.70 Monday.
A trader said foreign investment inflows to the local equities market during the day helped lift the peso amid the negative close of the main stocks index.
The local unit opened the day better at 49.64 from 49.88 in the previous session, which the trader said was partly affected by the same rhetoric from Federal Reserve Chair Janet Yellen, who reiterated the sustained growth of the US economy, which is the main factor for the hikes in the Fed rates.
The peso further improved mid-trade to 49.60 during the day but also moved to 49.75 resulting in an average of 49.67.
Volume of trade reached USD 577 million, a drop from the USD1.12 billion a day ago.
The trader expects the peso to range between 49.60 and 49.80 to a greenback Wednesday, which is the last trading day for this week given the observance of the Holy Week.
EastWest Bank Vice Chairman and Chief Executive Officer Antonio Moncupa said the peso’s strength since last week was in line with the improvement of other emerging market currencies and bourses.
“It appears that the depreciation of the peso in the last few weeks was exaggerated. And there appears to be more comfort in the governance style of the administration,” he said.
Moncupa said “confidence on the promised massive infrastructure build-up and tax cuts of the new (US) administration appear to be a bit overdone.”
“The relative value of local equities vis-à-vis other emerging markets valuation is one factor too for the inflows,” he said.
“Looking at the trend, USD/PHP still has a lot of ground to retraced. I share the view expressed by some economists that aside from risk attitude towards emerging markets, local inflation watching will be a major factor in future USD/PHP trend,” he added.
On the other hand, the Philippine Stock Exchange index (PSEi) shed 0.22 percent, or 16.51 points, to 7,601.40 points, ending its two-day rally.
All Shares followed with a 0.19 percent, or 8.69 points, decline to 4,532.92 points.
It was a mixed results for the sectors, with Mining and Oil, Industrial, and Services up by 0.62 percent, 0.46 percent, and 0.37 percent, respectively.
Property, meanwhile, fell by 1.19 percent along with Financials, 0.40 percent, and Holding Firms, 0.02 percent.
Total volume for the day reached 1.5 billion shares amounting to Php 7.13 billion.
Decliners outnumbered advancers at 118 to 87 while 47 shares remained unchanged.