Philippine Stocks Tumble as Peso Weakens, Inflation Fears Mount

MANILA, Philippines — Shares succumbed to the pressure as the peso continues to weaken near the 63 to $1 level, pulling the local stock market nearer 6,000. The bellwether Philippine Stock Exchange index (PSEi) yesterday tumbled by 1.11 percent or 67.29 points to 6,007.78, as investors feared the peso’s decline is far from over. The broader All Shares index also slipped by 0.62 percent or 21 points to 3,342.52. Regina Capital Development Corp. head of sales Luis Limlingan said investors have taken a step back following the peso’s folding to 62.86 to $1 on Monday. Further, they went on a selling spree because they believed the depreciation would persist. The peso yesterday plunged to a new record intraday low at 62.925 after opening at 62.9 and strengthening to an intraday high of 62.777. It appreciated by 2.5 centavos to close at 62.835 from Monday’s all-time low of 62.86 as traders believed that the Bangko Sentral ng Pilipinas intervened to smoothen the volatility in the market, as volume almost doubled to $1.9 billion from $969.22 million. Likewise, there are concerns that elevated oil prices would worsen the peso’s decline. Given that the Philippines is a net buyer of oil, it spends more for every barrel of import, causing the peso to become volatile in foreign exchange. “Elevated oil prices continued to weigh on investor sentiment, raising concerns over inflationary pressures and the broader economic outlook,” Limlingan said. Investors are likely keeping a cautious stance in trading, especially with the US Federal Reserve expected to hike interest rates in a move to prevent inflation from potentially running away. The PSEi saw P5.35 billion worth of shares changed hands yesterday, as the losers outnumbered the winners, 96 to 90, leaving 53 issues unchanged.