Peso hits new low of 49 to $1; stocks dive

Local financial markets plumbed new depths yesterday on a deepening political crisis sparked by continuing allegations President Estrada took bribes from illegal gambling operators, dealers said.

At the Philippine Dealing System (PDS), the peso tumbled to a record low of 49 to the dollar in morning trading, eclipsing the previous record of 48.50 posted on Friday as traders shrugged off both the President’s weekend vow to get the government out of gambling and his apology for the scandal involving alleged jueteng payoffs.

At the Philippine Stock Exchange (PSE), share prices breached the 1,300-point support level and plunged to a new two-year low, pulled down by the weakening peso and a lack of confidence in the Estrada administration.

At the end of trading at the forex market, however, the peso managed to recover by closing at 48.670 to the dollar as the Bangko Sentral ng Pilipinas (BSP) intervened in the foreign exchange market. "Thanks to the BSP’s continuing intervention," currency traders said. It was not known how much the BSP pumped into the market although sources said it could be about $60 million to $80 million.

Market players said the peso could have breached the 49 level if the BSP had not intervened and sold dollars.

Some traders, however, believe the BSP may not sustain its intervention because its foreign exchange reserves would miss its $16.1-billion target at the end of the year.

Yesterday’s close, however, was still 17 centavos lower compared to Friday’s close of 48.500 to the dollar.

"The peso is still reeling from the impact of political uncertainties," a trader said, adding that external factors such as the Middle East crisis also affected the peso’s performance.

The 30-company composite index shattered the sensitive 1,300 support for the first time in two years, closing 28.63 points lower at 1,298.44. The last time the index ended below the 1,300-point level was on Oct. 8,1998 at 1,250.41.

"It’s still down due to political uncertainties and peso depreciation. It shows a crisis of confidence among the business community," said Teresa Lee-Jahrling of Tower Securities Inc.

On a broader scale, the All Shares Index managed to inch up 5.77 points or 0.89 percent to 653.87 as stocks of Canadian giants Sun Life and Manulife both rose by P40.

Compared to last Friday’s unusual rise, the fall in the Phisix yesterday was again an aberration of sorts, as this defied the general pickup in the US and Asian markets.

"We really defy logic at this point," said Irving Ackerman of I. Ackerman and Co. "We are not seeing the real McCoy yet."

For his part, Albert Chua of All Asia Asset Management said "the seismic shock that we’re feeling is really that of political problems."

"It is still the same thing. It’s still because of the gambling scandal. It has not been resolved," added April Lee of Citisecurities Inc.

Traders said the market is unlikely to improve unless the political crisis gripping the country settles down.

The next psychological support level for the index is at 1,250 points, but traders said this may not prove solid as the market continues to weaken in the coming days.

"Some of the traders are waiting for the Phisix to spike down to 1,280 to start loading up their portfolio. We may go down some more but not to push the panic button just yet," they said.

The main index bottomed to a record low of 1,082 on Sept. 15, 1998.

"They’re still concerned with the political scenario" and other economic and financial concerns currently pressuring the market, said Fitzgerald Aclan, vice president for sales at KGI Securities.

Losers outnumbered gainers by a wide margin, 52 to 13, while 33 issues were unchanged.

Volume fell to 717.6 million shares worth P683.5 million from 873 million shares worth P1.21 billion.

Leading the bloodbath were telecom giant Philippine Long Distance Telephone Co. (PLDT) which gave up P5 to end at P775; Ayala Land, down 20 centavos to P4.20; Metropolitan Bank and Trust Co., down P1 to P167; while SM Prime Holdings Inc. lost 15 centavos to P4.15.

The gambling payoffs scandal took a toll on the financial markets, with the BSP last week jacking up interest rates and raising reserve requirements of banks to cushion the peso’s sharp drop. –Donna Gatdular, Conrado Diaz Jr, wire reports.