Peso at 9-month low, index weakest in nearly 2 years

07/03/2008

The peso hit a new nine-month low while the stock index was at its lowest in nearly two years as fears grew among investors that inflationary pressures in the region would significantly affect economic growth.

Share prices closed 0.9 percent down to a fresh 22-month low with the composite index losing 21.35 points to 2,393.90, the day’s low. The all share index dropped 13.76 points to 1,531.28.

The local currency extended its losses to finish at 45.20 per dollar, its lowest since October 2007.

At the Philippine Dealing System, the unit opened at 45 flat during the day, which was the strongest for the currency yesterday.

Its closing rate was also its weakest trade for the day bringing the average at 45.15, down from the previous day’s 44.93.

Total volume of trade also declined after it reached $608.65 million from $811.5 million the previous day.

Inflation was what traders cited as reason of the unit’s performance, noting the central bank’s forecast of a double-digit rate on price increases for June.

Last May, inflation was at 9.6 percent, while the Bangko Sentral ng Pilipinas projected the the June figure would range between 10.4 percent to 11.2 percent.

The National Statistics Office is scheduled to release the June inflation figure this Friday.

“It’s the same old story. Oil prices remain the market’s main concern,” Ron Rodrigo of DBP-Daiwa Securities told Dow Jones Newswires.

He said the market could fall some more should crude oil prices extend their rise, and put the support level at 2,350 points.

But “an investor with a long-term view should see this as an opportunity to start buying,” Rodrigo said.

Property and bank scrips led the fall ahead of the release on Friday of June inflation data, which economists say should hit double-digits for first time in almost 10 years after rising to 9.6 percent in the previous month.

Ayala Land fell 6.5 percent to P8.70, while Megaworld was off 1.7 percent to P1.18.

Bank of the Philippine Islands dropped to P43, while Philippine Long Distance Telephone Co. rose 0.2 percent to 2,355 on a technical recovery.

San Miguel A and B shares both ended unchanged at P40.

AFP

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