The Philippine Stock Exchange index (PSEi) surged on Tuesday, climbing 1.98 percent to 6,474.60, as the local market drew support from the peso’s recent appreciation streak against the US dollar and favorable cues from Wall Street.

The peso’s rebound from record-weak levels in mid-January improved investor sentiment by lowering imported inflation risks and encouraging foreign fund inflows into Philippine assets, helping stabilize the local bourse after a late-January pullback.

As the currency strengthened further into early February, improved risk appetite and expectations of Bangko Sentral ng Pilipinas (BSP) policy easing supported equity valuations, allowing the index to recover and trade back within the 6,300–6,400 range.

Trading subdued

Despite the rally, trading activity remained subdued, with turnover at P5.90 billion, below the year-to-date average of P6.40 billion, reflecting continued investor caution ahead of corporations’ fourth-quarter 2025 earnings releases and uncertainty surrounding a potential BSP rate cut.

Foreign investors were net buyers, recording P1.01 billion in net inflows, while all sectors ended in positive territory, led by services, which surged 4.40 percent. Market breadth was positive, with 110 advancers outpacing 90 decliners.

International Container Terminal Services Inc. emerged as the top index gainer, rising 6.35 percent to P670, while Universal Robina Corp. was the main laggard, slipping 1.47 percent to P73.75.

Peso strengthens

Meanwhile, the peso strengthened to P58.53 per dollar from the previous close of P58.58, supported by improved global risk sentiment and US dollar softness following favorable international market cues.

Expectations that domestic inflation remains manageable — settling at 2.0 percent in January and within the BSP’s target range — reinforced projections that the central bank may maintain an accommodative policy stance.

Continued foreign portfolio inflows into local equities and bonds likewise boosted dollar supply in the market, further supporting the peso.

The local currency has recently appreciated from around the P59-per-dollar level to P58.53, driven by both external and domestic factors. Broad US dollar weakness, easing US Treasury yields, and improved global market sentiment encouraged investors to shift toward risk assets.

Imported inflation reduced by stronger peso

A stronger peso helps reduce imported inflation and input costs for companies reliant on foreign raw materials, improving corporate earnings prospects.

Currency stability also lowers exchange-rate risks, encouraging foreign capital inflows into equities. As a result, the peso’s appreciation has helped sustain improving market confidence and supported upward momentum in local stock prices.