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THE peso appreciated sharply while local share prices
closed higher Monday on bargain hunting despite general caution
ahead of this week’s Bangko Sentral ng Pilipinas (BSP) meeting on
interest rates, dealers said.
At the Philippine Dealing System,
the local currency strengthened to 45.245 to the dollar from the
45.660 finish last weekend. Trading volume rose to $798.7 million
from $770.750 million previously.
At the Philippine Stock Exchange,
the composite index added 19.28 points to 2,457.27. The all-share
index rose 6.91 points to 1,551.65.
Fifty-eight issues advanced, 31
declined and 43 were unchanged.
Turnover rose to P1.7 billion
from P1.635 billion on Friday.
“Issues are already at candy
prices, and any investor will find most of the blue-chips at
attractive levels,” Astro del Castillo of First Grade Holdings
told Dow Jones Newswires.
He expects the market to
consolidate in a tight 2,450 to 2,480 points band Tuesday as
investors stay on the sidelines ahead of the central bank’s
interest rate-setting meeting Thursday.
The meeting comes amid external
worries led by high oil prices and renewed US credit concerns.
In a research note, Development
Bank of Singapore (DBS) said the BSP will continue to raise interest
rates to help cap the upside of the local currency.
The Singaporean lender said the
Monetary Board would raise policy rates at a measured 25 basis
points, bringing the overnight borrowing and lending rates to 5.50
percent and 7.5 percent, respectively.
DBS said expectations of future
inflation are rising, judging by wage demands and various surveys.
“The hawkish BSP has repeatedly
pointed to these pressures and the need for them to be cooled.
Further tightening is therefore on the cards this week, and even in
the months beyond that,” the Singaporean lender said.
It said the Monetary Board would
raise its overnight borrowing and lending rates to 6 percent and 8
percent, respectively, by yearend.
Separately, Metropolitan Bank and
Trust Co. said the dollar will trade higher this week after oil
prices climbed $5 to a new record above $147 on lingering worries
over Iran’s nuclear aspirations and a potential strike in Brazil.
“The plunge in US stocks on
Friday [was due to] fears the US government would bail out US
mortgage finance companies. However, the upside may be tempered by
the BSP selling the greenback and the possibility of an interest
rate hike,” Metrobank said.
In a recent country report, the
Institute of International Finance (IIF) cut its economic growth
forecast for the Philippines this year to 5.2 percent from an
earlier projection of 6.5 percent. The IIF said growth would improve
slightly to 5.5 percent next year.
“Rising inflation and a
weakening external demand make it difficult for the Philippine
economy to overcome the weakness at the early part of the year,”
the global group of financial institutions said.
--AFP, Chino S. Leyco
and Maricel E. Burgonio
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