Peso breaks into 43:$1 territory as stocks post new all-time high

MANILA, Philippines - The peso briefly breached the 43 to $1 level yesterday due to strong foreign exchange inflows on the back of the stronger-than-expected economic growth as well as robust overseas Filipino workers’ remittances.

Analysts said the peso outperformed its Asian peers yesterday, rallying by 0.8 percent against the dollar to a two-year high of 43.880 to $1 during morning trade.

However, it lost some ground in the afternoon, closing at 44.135 to $1 or 15 centavos lower than Thursday’s close of 44.120 to $1.

“Regional currencies have been strong and we’ve been following that. The new high on the yuan and gains in Philippine stocks are pushing the peso up. The central bank is believed to have come in bidding for dollars at 44,” a dealer said.

Trading volume at the Philippine Dealing and Exchange Corp. remained brisk with $1.172 billion changing hands compared to $1.111 billion on Sept. 9.

At the Philippine Stock Exchange (PSE), the   index extended its winning streak for ninth straight session yesterday, surging to a new historic high after it closed at 3,972.60.

The key index rose 70.04 points or 1.8 percent to 3,972.60. The advance brought the market’s total gain to 11.6 percent since Aug. 31.

The broader all-share index went up 37.01 points or 1.5 percent to 2,475.33. All subindices finished in green, led by the holding firm sector, which rose 2.9 percent. Advancers trounced decliners, 102 to 47, while 35 issues were unchanged. Value turnover was hefty at P8.05 billion.

“The PSEi continued to hit new highs on the back of investor confidence in the Philippines. We hope this trend continues for the long-term as the exchange undertakes reforms that will further develop the stock market,” PSE president and chief executive officer Val Suarez said.

Currency traders on the other hand, said the peso would maintain its strength against the dollar and would likely close within the 43 to $1 level this week as sentiment on global growth continued to improve.

Traders pointed out that Asian economies including the Philippines continued to be ahead of the global growth story resulting in higher inflows from investors.

“Asia continues to be ahead of the global growth story and to receive strong flows from investors looking to take advantage of its higher rates and stronger currencies,” one trader said.

The country’s gross domestic product (GDP) growth zoomed to 7.9 percent in the first half of the year from 1.2 percent in the same period last year. The GDP expanded by 7.9 percent in the second quarter of the year from the revised growth of 7.8 percent in the first quarter of the year.

The traders also cited the improved investor confidence towards the Philippines with the recent sale of $1 billion worth of global-peso denominated bonds wherein orders almost reached $14 billion.

Another trader said strong OFW remittances towards the start of the Christmas season would continue to support the strengthening of the peso against the dollar.

Latest data showed that OFW remittances grew by 6.9 percent to $9.062 billion in the first half of the year from $8.479 billion in the same period last year. For the month of June alone, money sent home by Filipinos abroad rose 8.3 percent to hit a monthly record high of $1.623 billion from $1.498 billion in the same month last year.

The BSP has upgraded its growth forecast for the amount of money sent home by overseas Filipinos to eight percent instead of six percent due to the strong demand for Filipino skilled workers.

Last year, remittances went up by 5.4 percent to a new record level of $17.348 billion last year from $16.426 billion and exceeded the revised four percent growth forecast set by the central bank due to the steady growth of OFW remittances to the sustained demand for skilled Filipino workers overseas particularly engineers, medical practitioners, and teachers.

Meanwhile, Philippine Long Distance Telephone Co. was the most actively traded stock by value. It recovered from a 5-session losing streak as it gained 1.4 percent to P2,440 on Monday.

Second most active was Megaworld Corp., which soared 8.5 percent to P2.31. That was the stock’s highest closing price since April 2007.

Holding firms SM Investments Corp. and Ayala Corp. also advanced.

SM added one percent to an all-time high of P515 while Ayala rose 3.8 percent to P413.20, its best finish since January 2007.

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