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Peso slides to more than 10-year low vs US dollar; PSEi finishes in the red means BUSINESS

MANILA, Philippines -- Lower-than-expected initial jobless claims in the US along with the sustained rise of US Treasury rates weakened both the Philippine peso, which closed to its weakest since November 2006, and the local equities market Friday.

The local currency closed the week at P50.00, the weakest after the P50.12 on Nov. 16, 2006, from the previous session’s P49.97.

A trader said mid-month corporate demand for the US dollar is also another factor to the peso’s weakness.

Also, BPI lead economist Emilio S. Neri Jr. said “importers appear to have a more significant-than-usual demand while the regular sellers were not as active in today’s trading session.”

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said external uncertainties continue to impact on the peso.

“And despite market uncertainty about a March US Fed interest rate hike, there was higher demand from corporates today,” he said.

The BSP official said monetary officials “continue to see negative market sentiment dominating the strong Philippine market fundamentals.”

He, however, stressed that “we should see market reacting to news that OFW (overseas Filipino workers) remittances remain resilient and growth prospects remain very positive at the back of strong consumption, investment and public expenditures.”

“In real terms, the peso remains competitive and we continue to monitor pressure from weak exchange rate even as the exchange rate pass through to domestic inflation has gone down in recent years,” he said.

“There is no substitute to constant monitoring and surveillance for any possible risks in the horizon,” he added.

The peso opened at P49.94, a dip from the P49.89 in the previous session.

It traded between its closing and opening levels resulting to an average of P49.98.

Volume of trade reached $532 million, higher than the $376.5 million a day ago.

The Philippine Stock Exchange index (PSEi) lost 0.53 percent or 38.46 points and finished the week at 7,244.79 points.

All Shares followed with a 0.31 percent or 13.78 points decline to 4,388.01 points.

Only the Financials, among the sectors, ended the week with gains after rising 0.02 percent.

Services contracted by 1.32 percent, Holding Firms, 0.63 percent; Property, 0.27 percent; Mining and Oil, 0.19 percent; and Industrial, 0.04 percent.

Trade volume reached 3.1 billion shares amounting to P6.99 billion.

Losers led gainers at 99 to 93 while 48 shares were unchanged.