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PSEi is marginally up on a solid Q1 GDP report, as the peso finishes flat.

The major index of the local stock exchange rose further on Thursday as the Philippine economy performed better than anticipated in the first quarter of 2023, but the peso ended the day flat against the US dollar.

The PSEi, which measures performance on the Philippine Stock Exchange, increased by 16.87 points, or 0.25 percent, to 6,675.46 points.

All Shares then increased by 5.38 points, or 0.15 percent, to 3,551.48 points.

The majority of sectoral indexes improved throughout the day, with Property leading the way with an increase of 0.93 percent.

Services, Financials, and Holding Firms all lagged behind it by 0.43 percent, 0.31 percent, and 0.12 percent, respectively.

On the other hand, Industrial fell by 0.28 percent, while Mining and Oil fell by 1.70 percent.

23,28 billion shares, or PHP6.24 billion, were traded.

At 98 to 66, decliners outnumbered advancers while 62 shares remained unchanged.

Michael Ricafort, chief economist at Rizal Commercial Banking Corporation (RCBC), credited the PSEi’s success to the domestic economy’s stronger-than-anticipated 6.4 percent annual growth in the first quarter of 2023.

He claimed that despite problems brought on in part by the elevated inflation rate and the normalization of domestic economic output, the domestic growth from January to March this year was robust despite being slower than the 7.1 percent in the previous quarter and 8 percent last year.

With less of a drag from inflationary pressures, he continued, “the expected easing trend in year-on-year inflation for the coming months to about 5 to 6 percent from May to June 2023; 4 percent levels from July to September 2023; and 3 percent levels from October to December 2023, could fundamentally support faster GDP (gross domestic product)/economic growth going forward.”

After reaching a 14-year high of 8.7 percent in January of last year, the pace of price increases continued to slow down for the third consecutive month in April when it registered a slower figure of 6.6 percent on an annual basis.

The government’s projected range of 2 to 4 percent was far exceeded by the average inflation rate to date, which was 7.9 percent.

By the fourth quarter of this year, inflation is expected to return to within-target levels, according to monetary officials.

The impending El Nino phenomenon, according to Ricafort, will pose dangers to inflation and growth due to anticipated lower agricultural yields and increased costs.

The peso closed the day flat against the US dollar at USD55.75 from USD55.67 on Wednesday amid the increase in the main equity index.

In addition to other factors, Ricafort ascribed this to the rise in the government’s debt-to-gross domestic product (DTP) ratio, which reached a record high of 61 percent as of the first quarter of the year.

In his words, the performance of the peso during the day was also influenced by the expansion of the domestic economy in the first three months of the year.

On Thursday, the local currency opened at 55.58 and fluctuated between 55.78 and 55.54. The level was 55.672 on average.

The volume decreased from USD1.41 billion the previous session to USD1.29 billion.

According to Ricafort, the US dollar’s rising trend and foreign selling on the local stock exchange both hurt the peso.

He expects the currency pair to trade between 55.65 and 55.85 on Thursday.

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