The Philippine peso sank to a record-low close of P63.06 per US dollar on Thursday, breaching the P63 level for the first time, as the war in the Middle East continued to pressure the local currency.
The peso weakened past P63 per dollar during morning trading and touched P63.15, setting a fresh intraday record low, according to Bankers Association of the Philippines data. It opened at P62.83 and traded between P62.75 and P63.15 before closing at P63.06, surpassing its previous record-low close of P62.90 set on 8 October.
The BAP morning weighted average was P63.035, while the afternoon weighted average rose to P63.075, indicating further weakness during the latter part of the session. The full-day weighted average reached P63.049, up from P62.803 on Wednesday, while the foreign exchange settlement rate increased to P63.035 from P62.773.
Spot-market volume rose to $1.50153 billion from $941 million a day earlier, with $966 million traded in the morning and $535.525 million in the afternoon.
The peso weakened even as the US dollar eased from a recent high, with global currency markets also responding to shifting expectations for Federal Reserve policy and persistent geopolitical risks.
Renewed Middle East tensions heightened concerns over oil supplies and the Philippines’ import bill, while hotter-than-expected US inflation data initially revived expectations that the Federal Reserve would keep interest rates higher for longer.
Despite some easing during the session, Brent crude remained above $100 a barrel, keeping pressure on the inflation outlook.
Philippine headline inflation accelerated to 7.2 percent in September, a development economists said could prompt further Bangko Sentral ng Pilipinas (BSP) rate hikes to help ease pressure on the peso. The currency has hit record lows nearly 30 times since the Gulf conflict began in March.
“The recent depreciation of the Peso likely signals the market’s view that additional rate hikes may be needed given the risks to inflation, as well as other external headwinds such as the recent surge in global bond yields,” said BPI lead economist Emilio Neri Jr.
The peso has depreciated about 8.6 percent from its 28 February close of P57.66, shortly before tensions escalated.
Meanwhile, the local equity market bucked the peso’s downward trend. The Philippine Stock Exchange Index (PSEi) rose 45.94 points, or 0.82 percent, to 5,663.17 on Thursday as bargain hunting lifted shares, despite renewed Middle East tensions and inflation concerns.
The market rebounded after two consecutive sessions of losses, with investors buying shares near the PSEi’s 5,600 support level. Foreign investors turned net buyers, recording P140.50 million in net inflows, although turnover remained modest at P5.95 billion as downside risks kept some investors on the sidelines.
The recovery was uneven across sectors. Property led the gainers, rising 1.89 percent, while Mining and Oil fell 2.47 percent, the steepest decline among the sectoral indices. SM Prime Holdings Inc. was the day’s top index gainer, climbing 5.57 percent to P16.68. Maynilad Water Services Inc. was the weakest index performer, dropping 2.98 percent to P16.30.
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