Inflation fears hit PSEi, peso volatility rises

The Philippine Stock Exchange Index (PSEi) fell sharply, dropping 107.64 points, or 1.87 percent, to close at 5,653.55 as oil-price pressures and inflation concerns weighed on sentiment. The broad-based decline reflected market unease over the domestic inflation outlook and external risks linked to energy costs.

Sector performance was largely negative, with only the Mining and Oil index posting gains, rising 0.41 percent. Services recorded the steepest decline among the sectoral indices, falling 2.95 percent, while Financials, Industrials, Holding Firms and Property also ended lower.

At the stock level, Monde Nissin Corp. led index gainers with a 3.33 percent rise, bucking the overall market downtrend. Bank of the Philippine Islands was the biggest laggard on the main index, declining 5.05 percent and adding to the drag on financial shares.

In the currency market, the peso snapped a six-session streak of record-low closes by strengthening 14.5 centavos, or 0.23 percent, to P64.025 per US dollar from the previous record-low close of P64.17. Despite the recovery, the currency continued to trade near historic lows as external pressures persisted.

The peso opened at P64.08 and traded as low as P63.94 and as high as P64.18, which marked an intraday record low. The morning weighted average stood at P64.074 on volume of $745 million, while the afternoon weighted average eased to P64.051 on $917.33 million.

For the full session, the peso’s weighted average exchange rate was P64.061, with total spot-market volume reaching $1.66233 billion. The foreign exchange settlement rate was P64.074, underscoring active trading as market participants reacted to global and domestic developments.

The peso’s recent sequence of record-low closes over nearly two weeks reflected several reinforcing external pressures rather than a single trigger. Rising global crude prices and renewed Middle East tensions, which threaten energy supplies, have been closely linked to the currency’s weakness.

As a major oil importer, the Philippines faces higher dollar costs for fuel purchases when global crude prices increase, intensifying demand for US currency and adding pressure on the peso. Economists have also highlighted persistent dollar demand and a widening balance-of-payments deficit as vulnerabilities in the country’s external position.

A weaker peso raises the local-currency cost of fuel and other imports, potentially adding to inflationary pressures in the domestic economy. These inflation risks have contributed to the cautious tone in equity and foreign exchange markets, reinforcing the risk-off sentiment seen in the latest PSEi decline and currency volatility.