At the Philippine Dealing System (PDS), the peso, along with most regional currencies led by the Indonesian rupiah, tumbled anew yesterday, closing at 53.135 to the dollar or 10.50 centavos lower than Monday’s close of 53.030 to $1.
Share prices, on the other hand, closed at their lowest in nearly 11 months as the stock market turned a blind eye to gains on Wall Street, focusing instead on peace and order concerns in the region.
Trading at the PDS opened with the peso at 53.100, before hitting a low of 53.170 and a high of 53.050 to the greenback.
Total volume traded declined to $104 million from Monday’s $109.40 million.
Currency traders said the Bangko Sentral ng Pilipinas (BSP) appeared to have stayed away from the market yesterday, allowing the peso to take its descent amidst regional pressures stemming from the recent terrorist attacks in the resort town of Bali, Indonesia.
Other regional currencies also continued to lose ground, with the Singapore dollar hitting a fresh five-month low of S$1.80 to the dollar, against S$1.79:$1 on Monday. The Thai baht, on the other hand, closed at B44.18 while the Indonesian rupiah was hardest hit, closing at R9,400 against the dollar compared to its R9340 close on Monday.
BSP Deputy Governor Amando Tetangco Jr. told reporters that despite the persistent weakness of the peso, the depreciation is still temporary.
Tetangco advised the public not to panic, saying that the BSP is monitoring the currency trading of banks to make sure that there is no unwarranted speculation on the peso.
Tetangco said substantial dollar remittances are still expected from overseas Filipino workers (OFWs) in time for the holiday season. "There are also tuition fees to be paid come November so there is usually a surge in remittances around this time," he said. "Those taking a position should take that into account," he said.
According to Tetangco, the BSP is watching the peso movements carefully, waiting in the sidelines for sharp movement that could be a signal for the central bank to make a move.
"If the movements are too sharp, then that could be a signal for the BSP to provide dollar liquidity to smoothen the peso movement," Tetangco said.
He said the demand for dollar was the same and with regional weakness weighing on the peso, the depreciation was not a surprise.
Oil companies have been stockpiling supply for the last few weeks, creating a demand for foreign currency that they require in order to make their oil importation.
Ordinarily, the volume of dollar inflows from OFWs would easily dampen the effect of this demand, but external factors complicated the market forces pressing against the peso.
Tetangco said that while the volatility is temporary, he admitted it would be difficult to predict considering the external factors that could complicate the situation even more.
"The good thing is that we are expecting bigger dollar inflows from OFWs in the coming months," he said.
OFW remittances are expected to hit a record high this year of $8 billion, up from only a little over $6 billion last year as the country deployed more workers abroad.
As a result, the country’s gross international reserves have been unusually strong, enough to allow the BSP to continue defending the peso against speculative attacks.
Market nears breaking 12-month lows
Meanwhile, as other regional markets took their cue from the rebound of the Dow Jones, the locl bourse was more cautious as the main index came closer yesterday to breaking 12-month lows.
Volumes remained light as the market reverted to its half-day trading schedule.
"We are not ignoring it (the Dow’s climb), there’s just a lack of volume in the market. There’s a lack of investor participation, that’s why the market is not reflecting the sentiment of other markets," said Mark Canizares, an analyst at Citisecurities Inc.
Overall turnover rose to P373.5 million against Monday’s P110.8 million, but it was still considered low. Losers had in a four-to-one majority over gainers.
Canizares said investors adopted a wait-and-see attitude as the market neared the 1,040 point immediate support in the main index.
The main index lost 19.82 points or 1.86 percent to end at 1,047.69 points, its lowest close since November last year.
Traders said they expected the market to maintain a bearish tone in coming sessions and possibly test its immediate support level, before re-testing major support at 980 points.
Efren Cruz, fund manager of the Mutual Fund Management Co. of the Philippines, said the market may fall further depending on how Indonesia and Southeast Asian governments respond to the blasts that killed at least 187 people in Bali.
"The Philippines, in spite of being the worst performing market in Southeast Asia year to date, is still considered by fund managers as more expensive than other markets. This bombing was taken as an excuse to unload further their holdings in the local market," Cruz said.
Top loser was dominant phone firm Philippine Long Distance Telephone Co which lost P16 to end at P244 , a fresh 11-year low.
Cruz said PLDT was one of the big-cap stocks which investors decided to unload.
Other blue chip stocks struck by selling included property firm Ayala Land Inc , down 30 centavos to P5, and its parent Ayala Corp., down 15 centavos to P4.85.
Food and beverage firm San Miguel Corpbucked the general downtrend, gaining 50 centavos to P53.50 while its B shares finished up P1 at P58.50.
Some analysts said the stock may have gained on expectations of good third quarter results.