Peso back at P56:$1; PSEi falls below 6,600

By The Manila Times
May 26, 2023

THE peso fell back to the P56:$1 level and the stock market also returned to 6,500 territory as concerns over the US debt ceiling mounted.

The currency weakened by 29-and-half centavos to P56.065 against the dollar while the benchmark Philippine Stock Exchange index (PSEi) dropped by 55.73 points, or 0.84 percent, to end the day at 6,560.22.

The broader All Shares shed 28.57 points, or 0.81 percent, and settled at 3,496.79.

“Given the ongoing concerns in the US, many investors were still on the sidelines with the net market value turnover recording only at P3.67 billion,” Claire Alviar, research associate at Philstocks Financial Inc., said.

On Wednesday, Fitch Ratings warned the US that it could lose its “AAA” rating due to continued political wrangling over the country’s debt ceiling.

China Bank Capital Corp Managing Director Juan Paolo Colet said the “market fell below its 6,600 support level as investors dumped shares and pared positions amid increasing worries about the US debt ceiling situation.”

“Investor anxiety was aggravated by Fitch’s move to place the sovereign credit rating of the US on ‘rating watch negative,’ meaning the country is at risk of losing its prized AAA rating if the US debt limit is not lifted,” he added.

“Such a downgrade would roil global financial markets, similar to what happened after S&P’s rating downgrade of US debt in 2011.”

The peso opened at P55.79:$1 and ranged from P55.74 to P56.11. Volume reached $1.637 trillion, almost double the $890 million posted in the previous session.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the US debt ceiling deadlock and uncertainty over the US Federal Reserve’s next policy move had weighed on the peso.

“The US dollar/peso [rate] also went up after global crude oil prices increased to new three-week highs after Saudi Arabia’s energy minister warned short sellers in the global crude oil market,” he added.

At the stock market, all sectors closed in the red with holding firms down the most by 1.22 percent. Mining and oil, and services also plunged by over a percent, both declining 1.07 percent.

A total of 715.82 million shares worth P3.95 billion changed hands.

Decliners outnumbered advancers, 113 to 53, while 59 remained unchanged.