Peso extends recovery as PSEi slips 0.44 percent

The Philippine Stock Exchange Index (PSEi) fell 25.23 points, or 0.44 percent, to 5,680.35 on Friday, while the peso strengthened 11 centavos, or 0.17 percent, to P63.74 per US dollar from Thursday’s P63.85 close, extending its recovery to a second consecutive session after a record-breaking slide that pushed the currency beyond P64.

All sectors ended lower, led by Mining and Oil, down 1.19 percent. GT Capital Holdings rose 4.03 percent to lead index gainers, while Aboitiz Equity Ventures fell 3.67 percent. Turnover reached P12.73 billion, with foreign investors posting net outflows of P4.49 million.

PSEi retreats

The local bourse retreated as renewed geopolitical tensions and rising oil prices heightened concerns over inflation and the interest-rate outlook. The decline came despite the peso’s continued recovery, suggesting that the currency’s short-term rebound did little to ease broader concerns weighing on equities.

Brent crude rose 1.49 percent to $116.59 a barrel on Friday, while West Texas Intermediate gained 1.42 percent to $103.45.

The gains followed reports of a tanker being struck in the Strait of Hormuz, alongside renewed regional tensions involving Iran, Saudi Arabia and Houthi attacks. The risks to oil supplies are particularly significant for the Philippines, which relies heavily on imported energy passing through the Strait.

US inflation remains elevated

The US Federal Reserve’s decision to keep its benchmark rate at 3.75 percent to 4 percent also remained relevant to currency sentiment. The Fed said inflation remained elevated, while two policymakers dissented in favor of a rate increase.

Although the decision did not guarantee a stronger dollar, the possibility that US rates could remain high or rise further may support demand for dollar assets and limit the peso’s recovery.

On Friday, the peso traded between P63.61 and P63.77 after opening at P63.67. It closed 11 centavos stronger than Thursday, while the morning weighted average was P63.65 and the afternoon average was P63.706. The full-day weighted average stood at P63.672, with total spot volume at $1.280 billion.

Despite its recent recovery, the peso remains under pressure from persistent dollar demand and concerns over the Philippines’ external payments position. The country’s balance-of-payments deficit reached $9.1 billion at end-September, compared with $5.3 billion over the same period last year, according to figures cited in market reports.

A wider external deficit can add to demand for foreign currency, although it does not by itself explain daily exchange-rate movements.

Markets will be closed on Monday, 2 November, for the All Souls’ Day non-working holiday.