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PSEi and the peso declined on the news of US retail sales

The higher-than-expected January retail sales figure in the United States caused the main index of the local stock exchange and the peso to conclude Thursday in a sideways fashion.

To reach 6,815.91 points, the Philippine Stock Exchange index (PSEi) lost 0.09 percent or 6.18 points.

To reach 3,639.08 points, All Shares increased by 0.08 percent or 2.90 points.

Financials, 0.92 percent; Services, 0.01 percent; and Mines and Oil, 1.11 percent, all of the sectoral indices finished in the red.

Whereas industrial increased by 0.05 percent, holding companies increased by 0.14 percent, and property increased by 0.32 percent.

A total of 1.2 billion shares, or PHP12.23 billion, were traded.

At 102 to 80, decliners outnumbered advancers while 54 shares remained the same.

Regina Capital Development Corp.’s head of sales, Luis Limlingan, stated that the PSEi closed lower despite the US retail sales growing by a stronger-than-anticipated 3 percent annually, exceeding the estimate of about 1.9 percent rise.

According to him, “(this) signaled that the Fed (Federal Reserve) may still have work to do to control inflation.”

On the other hand, oil futures remained essentially unchanged as the dollar surged amid concerns that an increase in interest rates would slow the economy and reduce demand for fuel.

West Texas Intermediate (WTI) crude oil price decreased by 0.6 percent to USD78.59 per barrel while Brent crude oil price fell by 0.2 percent to USD85.38 per barrel.

In the meantime, the local currency decreased from its Wednesday close of 55.17 to 55.12 at the day’s end.

It started the day at 55.35, a lower price than the 54.95 opening of the prior session.

It fluctuated between 55.39 and 55.02, averaging 55.217.

Trade volume increased to USD1.14 billion from USD1.07 billion the previous day.

Michael Ricafort, the chief economist of Rizal Commercial Banking Corporation (RCBC), attributed the peso’s decline to a number of factors, including the strengthening of the US dollar, the anticipation of further rate increases by the Federal Reserve and the Bangko Sentral ng Pilipinas (BSP), and geopolitical tensions between the US and China.

According to Ricafort, over the past 7.5 months, the peso has been trading somewhat more favorably against the US dollar.

According to him, this “would help reduce inflationary pressure through lower importation costs or prices and also partially supported the recent increases in the local financial markets, especially the stock market and the bond markets.”

The anticipated trading range for the currency pair on Friday is 54.35 to 54.55.

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