THE PESO could depreciate this week versus the dollar ahead of an anticipated rate hike in the United States, although optimism towards the local stock market and the rollout of economic reforms could temper such weakness.
The peso may weaken this week as investors look ahead to the US Federal Reserve’s policy meeting. -- BW FILE PHOTO
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Peso slips ahead of FOMC
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Peso rises amid cautious market
The local unit moved sideways on Friday to close at P49.50 against the greenback, nearly flat coming from Thursday’s P49.495 finish. Week on week, the peso appreciated for the third straight week from P49.55-to-a-dollar seen on June 2.
The peso even traded at a six-month high of P49.40 on June 5, its best showing since a P49.35 close on Nov. 16, 2016. Traders attributed the currency’s strength to comments from Moody’s Investors Service that the passage of the first tax reform package at the House of Representatives is “credit positive” for the Philippines.
Local financial markets remained closed on Monday in observance of Independence Day.
An analyst interviewed over the weekend said the peso might weaken in the coming days ahead of an expected “lift-off” in US interest rates during the Federal Open Market Committee’s (FOMC) June 13-14 meeting, coupled with market uncertainty towards the United Kingdom.
“The dollar might appreciate this week, fueled by the likely interest rate hike of the US Federal Reserve and safe-haven buying amid political concerns in the UK that could derail Brexit negotiations,” said Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines.
“However, the greenback’s strength might be tempered by mixed US data and possible hints of a slower pace of US interest rate normalization in the coming months,” Mr. Dumalagan said.
Traders are pricing in a 25-basis-point rate increase from the FOMC this week, which would be the second hike this year following a similar move announced in March.
On the other hand, markets grew uncertain towards the UK and the pound sterling after the June 8 general elections left Prime Minister Theresa May with a minority in parliament ahead of formal discussions for Britain’s departure from the European Union, Reuters said in a report.
Another trader said the Fed hike has already been priced in by market players, so any movements on the exchange rate can be influenced by developments in the local economy.
“The Fed hike has been anticipated already, so I think what people will want to watch is the turnout of the first half... From a week-on-week perspective, the peso is appreciating mainly because of the stock market,” the second trader said by phone. “The second quarter also saw the markets ecstatic on tax reform, it showed the government’s commitment to pass it.”
The bellwether Philippine Stock Exchange index also breached a new high for the year at 8,001.38 on Monday last week, which was likewise traced to optimism on the government’s tax reform plan.
The House of Representatives approved the first package on May 31 covering lower personal income taxes versus higher excise duties on other goods, leaving the bill open for discussions and approval in Senate as Congress resumes sessions next month.
AYALA-LED Bank of the Philippine Islands (BPI) detached again its electronic channels on Thursday as some financial balances kept on reflecting erroneous exchanges, a day after a glitch deadened its framework.
Electronic channels of the bank stayed difficult to reach for a moment day.
"During the time spent amending adjusts of records with mis-posted exchanges, we have noticed that specific records still reflect inaccurate adjusts. To enable us to do the fundamental changes, we should deactivate our electronic channels today," the nation's third biggest bank in resource terms said on Thursday.
The declaration came a couple of hours after it posted a counseling before in the day that entrance to the greater part of its electronic channels had been reestablished after it redressed an "inner information handling mistake" that happened on Wednesday.
BPI again closed down mechanized teller machines (ATMs) and also on the web and versatile application based offices. It in like manner amplified its managing an account hours until 7:30 p.m.
The bank had done likewise on Wednesday after a few BPI contributors saw their financial balances on Wednesday dissolved or cushioned with zero clarification that caused fears of hacking. The same mistaken credits and charges were reflected once more in a few records on Thursday.
BPI Senior Vice-President Catherine P. Santamaria said on Wednesday that the mistakes were caused by a "glitch" that multiplied postings of exchanges directed between April 27 and May 2. The bank had guaranteed to determine the blunders and reestablish its administrations inside that day.
Bangko Sentral ng Pilipinas Deputy Governor Nestor A. Espenilla, Jr. told correspondents on Wednesday night that the national bank will start its examination once BPI can resolve the framework issue and reestablish the right adjusts.
Notoriety AT RISK
Looked for input, Disini and Disini Law Office Managing Partner and innovation law master JJ Disini said in an email that it is "difficult to tell" if the framework issue could influence the bank's execution in the close and long haul. "Since banks hold individuals' well deserved cash, any sign of carelessness will have long haul impacts on their notoriety and, eventually, their business."
On a comparative note, Computer Science Professor at the University of the Philippines Los Banos (UPLB) Rommel Bulalacao said that while the bank's electronic stations are disconnected "they are losing cash and all the more most likely essential the trust of their customer base."
Inquired as to whether the episode could influence the bank's stock and execution, Philstocks.ph Senior Analyst Justino B. Calaycay, Jr. said in an instant message: "I don't think it will have a long haul affect. Truth be told, the bank demonstrated an extraordinary capacity to act expeditiously on what would've been a sad occasion for it as well as for the business."
Shares in BPI lost 70 centavos or 0.66% to close at P105.90 each on Thursday.
THE INSURANCE business could support a twofold digit development in its premiums for the entire year, the controller's boss stated, with firms to ride on the nation's strong development.
The Insurance Commission (IC) is bullish that the segment can keep up a 20% expansion in its aggregate premium salary for 2017 after both life and non-disaster protection firms booked a 19.51% ascent in premiums to P57.035 billion in the main quarter.
Preparatory information in view of quarterly reports presented by life and non-life organizations to the IC uncovered the part's aggregate pay from premiums in the January to March period bounced to P57.035 billion, a 19.51% development from the P47.725 billion booked in a similar period a year prior, on the back of the segment's powerful development amid the three-month time frame.
Separated, life back up plans posted P44.08 billion worth of premiums at end-March, a 14.19% development from the P38.36 billion recorded in January-March 2016.
Non-life firms additionally recorded a twofold digit development of 19.4% in its net premiums kept in touch with P10.89 billion at end-March from the P9.12 billion signed in the practically identical period a year prior on the back of an expansion in premiums produced from the engine and fire business.
"I suspect as much, in light of the fact that the economy has enhanced or will be enhancing from that of a year ago... As you probably are aware, there will be a generous increment in framework spending plan," Insurance Commissioner Dennis B. Funa told columnists in a trap meeting when inquired as to whether safety net providers would have the capacity to manage first quarter's top notch development rate for whatever is left of the year. "So I'm extremely confident and positive."
For 2017, President Rodrigo R. Duterte's organization set a P3.35 trillion spending plan, reserving P860.7 billion for foundation, which is equal to 5.4% of the nation's aggregate total national output (GDP), against the P756.4 billion modified in 2016.
The Philippine economy developed by 6.8% in 2016, the quickest rate in three years, on the back of a surge in speculations and solid utilization.
Notwithstanding, the nation's GDP development for the initial three months of 2017 came in at only 6.4%, well beneath the administration's anticipated 7% pace and slower than the 6.6% print found in the past quarter, and in addition the 6.9% enlisted in a similar period a year ago.