The Philippine peso recovered Wednesday, staying at the 58-to-the-U.S. dollar level after three days of depreciation as the local stock market continued declining.
The local currency closed at P58.06:$1, gaining 21 centavos following a statement from the Bangko Sentral ng Pilipinas (BSP) that it would intervene to temper the foreign exchange market.
Central bank governor Eli Remolona Jr. said late Tuesday that the would intervene "when necessary to smoothen excessive volatility and restore order during periods of stress.""The peso weakened beyond 58 to the U.S. dollar today, in line with other regional currencies. The dollar continued to strengthen as the Federal Reserve signaled delay in cutting interest rates," Remolona said.
Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said the BSP's statement and several intervening factors impacted the foreign exchange market correction.
He said, “The U.S. dollar/peso exchange rate finally corrected lower, considered a healthy downward correction… after reiterations lately about possible intervention in the local foreign exchange market to smoothen any excessive volatility and restore order, if necessary.
"Also, during Wednesday's trading, the Philippine Stock Exchange index (PSEi) fell by 26.44 points and closed at 6,607.22. The All Shares also declined by 11.82 points to 3,523.95."The local market extended its decline, dropping by 26.44 points (0.40 percent) to 6,607.22, as the Philippine peso remained below the PHP58 mark against the U.S. dollar.
The peso's weakening could have many negative impacts on our economy, one of which is the upward pressure it may exert on inflation if this trend persists," Philstock Financials, Inc. assistant research manager Claire Alviar said."Moreover, foreigners weighed on the market further, registering a net outflow of P644.62 million.
The net market value turnover stood at P4.76 billion."Sector indices ended mixed, with Properties experiencing the biggest decline of 1.39 percent. Meanwhile, the Service and Holdings sectors were in the green, increasing by 0.90 percent and 0.17 percent, respectively.
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