Investors are increasingly concerned about the inflationary impact of surging oil prices and a weaker currency; the PSEi decline extended the market’s pullback as Brent crude remained well above $100 a barrel amid intensifying fighting around the Middle East and the Strait of Hormuz.
The Philippine Stock Exchange Index (PSEi) on Friday declined 37.42 points, or 0.61 percent, to 6,061.81 even as the peso weakened 14.5 centavos, or 0.23 percent, to a fresh record low of P62.68 per US dollar.
Investors grew increasingly concerned about the inflationary impact of surging oil prices and a weaker currency. The decline extended the market’s pullback as Brent crude remained well above $100 a barrel amid intensifying fighting around the Middle East and the Strait of Hormuz.
Trading was relatively subdued, with net value turnover at P5.83 billion, while foreign investors turned into substantial net sellers, posting P999.47 million in net outflows.
Selling was broad-based, with Properties the lone sector to finish flat. Mining and Oil was the weakest, falling 3.27 percent and reversing part of Thursday’s sharp gain. Century Pacific Food Inc. was the strongest index constituent, rising 5.31 percent to P33.70, while GT Capital Holdings Inc. was the weakest, falling 3.44 percent to P448.80.
The peso opened at P62.655, reached an intraday high of P62.775 and bottomed at P62.630 before closing at P62.68.
The BAP weighted average rose to P62.719 from P62.542, while the FX settlement rate increased to P62.732 from P62.547. Trading volume was $1.1385 billion, slightly below Thursday’s $1.189 billion.
Local currency’s latest decline
The currency’s latest decline reflected both the energy shock and stronger dollar demand. Higher oil prices are increasing the dollar requirement of Philippine importers, while elevated US yields are making dollar assets more attractive.
The dollar index was around 99.08 Friday morning, near its highest level in a week, while the US 10-year Treasury yield approached 5 percent.
Markets also priced in the increased likelihood of a 25-basis-point Federal Reserve hike at its 15–16 September meeting following stronger-than-expected producer-price data.
The August US CPI report, due later Friday, could further influence expectations for the Fed and add to pressure on emerging-market currencies.
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