Share prices closed up on last-minute buying while the peso closed down, following the US Federal Reserve’s decision overnight to hold interest rates steady.
A monetary official said the Bangko Sentral ng Pilipinas (BSP) may break away from the US Fed’s lead after it decided to keep policy rate steady Wednesday night.
The Philippine Stock Exchange index (PSEI) was up 27.36 points, a 0.43 percent hike to 6,461.42.
The broader All Shares index was up 7.03 points or 0.2 percent to 3,444.07. Trading turnover reached P6.1 billion.
The peso closed at 55.945 to the dollar, down from 55.94 on Wednesday. The currency opened at 56, hitting a high of 55.945 and a low of 56.10. Trading turnover reached $729.5 million.
The BSP is set to meet next week, June 22, in which deputy governor Francisco Dakila Jr. said it may opt to raise rates if the country’s inflation picture warrants the need.
“Even if the Fed decides to pause from its policy tightening, we may not move in complete lockstep if domestic inflation warrants a different response,” Dakila said speaking at a livestreamed investor briefing in Singapore.
While Dakila reiterated the BSP’s forecast that inflation will ease to within the official 2 to 4 percent target range starting in the fourth quarter, he said the Fed was “still quite hawkish and emphasized the continued vigilance and the possibility of further adjustments in monetary policy.”
The BSP kept its benchmark interest rate steady at 6.25 percent at its last policy meeting pausing its tightening cycle that began last year, with inflation — which slowed for a fourth consecutive month in May at 6.1 percent — on track to easing back towards the target band.
Dakila said the BSP’s policy-making Monetary Board remains data-dependent in making its own policy decision.
Other Asian currencies, meanwhile, retreated against the US dollar on Thursday as a sombre mood weighed on investors post the US Federal Reserve’s “hawkish pause,” while a faltering Chinese economic recovery further blunting the risk appetite, according to a report by Reuters.
The US Federal Reserve left its benchmark funds rate window at 5 to 5.25 percent in its monetary policy tightening cycle.
Some analysts called it a “hawkish pause” as it signaled borrowing costs would increase by another 50 basis points by December-end.
“The FOMC statement reflected a somewhat benign assessment of the economy, pointing out that economic activity has continued to expand at a modest pace,” DBS analysts said in a note.
Investors cut back short bets on emerging Asian currencies as most local central banks maintained their hold stance on interest rates, but remained firmly in bearish territory for the Malaysian ringgit and China’s yuan, a Reuters poll showed on Thursday.
The dollar index rose 0.26 percent to 103.3, recovering from a four-week low of 102.66 on Wednesday.
Juan Paolo Colet, managing director at Regina Capital Development Corp., said last-minute buying pulled the index to close in the green after investors considered the Fed’s monetary policy move.
“Sentiment was also helped by Fed Chair Jerome Powell’s remarks that he still sees a path to a soft landing for the US economy,” he said.
SM Prime Holdings Inc. was up P0.65 to P33.15. BDO Unibank Inc. was up P1.40 to P141.90. SM Investments Corp. was up P12 to P922. Ayala Land Inc. was up P0.25 to P24.25. International Container Terminal Services Inc. was down P2.50 to P194.50. Ayala Corp. was down P18 to P635. Globe Telecom Inc. was down P45 to P1,710. Bank of the Philippine Islands was up P1 to P105. Universal Robina Corp. was down P0.50 to P140.50. Bloomberry Resorts Corp. was down P0.39 to P9.17.
