Stocks dive, peso weakens further ahead of BSP rate setting meeting


Posted at Jun 22 2022 05:16 PM

MANILA - Philippine stocks took a beating for the second straight day, and the peso lost further ground a day ahead of the rate-setting meeting of the Bangko Sentral ng Pilipinas. 

The PSE index lost 117 points or 1.86 percent, while the broader All Shares index lost 40 points or 1.2 percent.

The peso also further weakened against the dollar, closing at 54.47 to $1, another 20 centavos lower than its Tuesday close of 54.265. 

The PSE index is now at a 52-week low, joining the rest of the Asian markets which posted steep declines on Wednesday. 

An analyst said investor sentiment has clearly shifted to “risk aversion” noting that this was the 13th straight day of net foreign selling. 

“With the BSP still to formalize their monetary policy tomorrow, most of the local players chose to stay on the sideline,” said Philippine Business Bank first vice president Angelo Calabio. 

He said there may be “a bit of a bounce tomorrow” with the market recovering to around the 6350 level. 

Calabio also expects the peso to further lose ground saying the dollar has become much stronger. 

Sophia Ng, currency analyst at MUFG Bank said a large current account deficit will also weigh down the peso in the next 1-2 years. 

Ng however also said the peso is not alone as other major currencies, including the Japanese yen, have also fallen versus the dollar. 

“So definitely we have a case of the dollar is king”, Ng said in an interview with ANC. 

Calabio meanwhile said many local players right now think that the BSP is lagging in terms of adjusting interest rates. 

“I think the sentiment of all the local players right now is that the BSP is a little behind when it comes to the policy rates, but the pronouncements of the outgoing BSP Governor [Benjamin] Diokno and also the incoming BSP Governor [Felipe] Medalla, they really sound still confident about the gradual tightening,” Calabio said. 

BPI earlier said that it expects the BSP to raise its benchmark rate by 50 basis points on Thursday. 

Calabio however said with the recent pronouncement by the BSP, he would be surprised if the BSP raised interest rate by half a percentage point. 

“But in terms of a house call, we're still sticking to 25 basis point increase tomorrow, but we will see gradual tightening in the next few months.”


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