The peso tumbled to its lowest level against the dollar in nearly three weeks after a Federal Reserve official said the US central bank wanted “more uncertainty” with regard to its interest rate moves.
The stock market, on the other hand, shrugged off continued concerns over a Fed rate hike, instead gaining on hints of a stimulus in Europe and betting on stronger Philippine economic growth.
The peso weakened to P47.22 to $1, losing 8 centavos from its P47.14 close on November 16, the last trading day before a four-day trading suspension on account of Manila’s hosting of the Asia-Pacific Economic Cooperation leaders’ summit.
Monday’s finish was the weakest since November 10’s P47.26:$1.
The Philippine Stock Exchange index (PSEi), meanwhile, rose by 0.91 percent or 63.38 points to 6,996.19 while the wider All Shares index also jumped by 0.80 percent or 32.12 points to 4,033.34 from Friday.
Last week, St. Louis Fed President James Bullard said: “I think we are going to return to an era where there is a bit more uncertainty about what the (Federal Open Market) Committee (FOMC) is going to do meeting to meeting.”
Metropolitan Bank & Trust Co. (Metrobank) Research said Bullard’s statement implied that investors should prepare for less direction as to how the Fed would be adjusting policy moving forward.
“He (Bullard) further said that although higher rates might be justified by December, pace of tightening may be gradual moving forward with the committee looking to be more flexible and active to data,” Metrobank Research said.
Markets have again been hit by volatility following reports that the US central bank will finally start raising interest rates next month.
Leonardo Arguelles Jr., president of Unicapital Securities Inc., said talk of a European Central Bank (ECB) stimulus had perked up investor sentiment at the stock exchange after pessimistic trading in the past few days.
“[The] market rose 63 points today on hints of stimulus measures from the ECB. This gives assurance that the European Central Bank will do necessary measures to reach its inflation target,” Arguelles said.
“Also, the market is betting on a favorable third quarter Philippine GDP figure, which is expected to accelerate,” he added.
Arguelles said the market “may retest recent highs this week,” rising to a much as 7,200.
On Monday, financials and mining and oil were the only sub-indices that fell. Decliners outnumbered advancers, 86 to 77, while 43 issues were unchanged.
The local currency, meanwhile, opened at P47 to $1 at the Philippine Dealing System on Monday before trading between P47 and P47.22. Total volume transacted rose to $748 million from $670.5 million in the previous session.