Manila: The Philippine peso weakened to the 59-level against the U.S. dollar on Thursday due to expectations for further cuts in the central bank rates, negatively affecting the Philippine Stock Exchange index. The local currency ended the day's trade at 59.02 to a dollar, from its 58.92 close a day ago, marking a nearly two-week low from its 59.05 close on November 20.
According to Philippines News Agency, the peso's weakness was evident early on when it opened the day at 58.95, compared to its 58.55 start in the previous session. The trading range was between 58.92 and 59.17, bringing the day's average to 59.07. The trading volume reached USD1.29 billion, lower than the USD1.41 billion recorded on Wednesday.
Rizal Commercial Banking Corporation chief economist Michael Ricafort attributed the peso's decline to expectations of a Bangko Sentral ng Pilipinas rate cut this month. Other contributing factors included negative sentiments in the local bourse, a lower domestic growth outlook, and a higher government bond sale. However, Ricafort noted that these factors might be countered by the seasonal increase in remittances from overseas Filipino workers during the Christmas season and expectations for a sustained manageable domestic inflation rate.
Ricafort also mentioned that local financial market sentiment received some support recently due to progress related to good governance, including developments in cases filed or litigated and the formal judicial processes initiated for anomalous flood-control projects and other high-profile violations in recent months.
The peso's performance was mirrored by the local bourse's main index, which fell 0.31 percent to 5,887.58 points. The broader All Shares index dropped by 0.18 percent to 3,458.65 points. Most of the sectoral gauges ended the day in the red: Industrial decreased by 0.60 percent, Holding Firms by 0.54 percent, Financials by 0.48 percent, and Property by 0.31 percent. Conversely, Mining and Oil rose by 1.49 percent, and Services increased by 0.44 percent.
