Philippine Peso Snaps Six-Day Gain as Companies Buying Dollarsby
Currency erases earlier advance as stocks fall 2.4 percent
Peso is still Asia’s best performer since May 9 election
The Philippine peso snapped a six-day rally on speculation companies took advantage of its recent gains to buy dollars to meet their quarter-end needs.
The currency fell 0.1 percent to close at 46.06 per dollar in Manila, according to prices from the Bankers Association of the Philippines. Earlier in the day, it rose as much as 0.4 percent to 45.85, the strongest since Oct. 15. The peso’s 2.3 percent gain in a month remains the best in Asia. Stocks fell 2.4 percent, the most since Jan. 21, even as foreigners bought net $4.1 million Thursday.
“Corporate demand brought the dollar-peso back above the 46 level,” said Jonathan Ravelas, chief market strategist at BDO Unibank Inc. in Manila. “Companies took advantage of the stronger peso arising from foreign portfolio flows to the stock market and used it as an opportunity to buy dollars.”
The currency ended a six-day rally that had been aided by more than $430 million of inflows into local shares since Rodrigo Duterte swept the May 9 presidential election. Finance Secretary-designate Carlos Dominguez has called the tough-talking mayor of Davao city pragmatic, and one who will build on policies that have made Philippines one of Asia’s fastest-growing economies. Goldman Sachs Group Inc. and casino mogul Enrique Razon have expressed optimism about the new leader, who takes office June 30.
Sentiment toward emerging-market assets has been bolstered by indications the Federal Reserve will refrain from raising interest rates at its June 14-15 meeting and that any policy tightening will be gradual. BDO Unibank’s Ravelas said he still expects the peso to end the year almost flat.
“Expectations of U.S. rate hikes should carry the local currency back towards 47 levels by the year-end,” he said.
The Philippine economy grew 6.9 percent in the first quarter, while inflation remained subdued at 1.6 percent in May, latest data show. The country’s foreign-exchange reserves were $83.5 billion at the end of May, near a record high, according to central bank data released on Monday.