Peso continues to decline; hot money seeps out

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Metro Manila (CNN Philippines, July 12) — The peso continues to weaken.

Trading closed at ₱53.5 to $1, which was also the intraday high and was also a mere centavo weaker than yesterday's close.

Today's intraday low was ₱53.49 versus the greenback.

While the stock market makes a gradual recovery, closing at 7,350.58 today with only the mining and property sub-indices in the red, the Bangko Sentral ng Pilipinas (BSP) reported a continuous pull-out of hot money last month.

As of June, foreign portfolio investments (FPI) amount to $306.25 million, with May and June's outflows almost completely offsetting the gains made in March and August.

Last month, the country's $901.78 million in FPI was completely wiped out by the $1.426 billion pulled out by investors in the stock market.

"This may be attributed to the United States (US) Federal Reserve's decision to increase interest rates and investor concerns on inflation and the further weakening of the Philippine Peso," the BSP said in a statement, adding that investors could also have pulled out in reaction to the looming U.S.-China trade war.

The top nations investing in Philippine securities are the U.S., United Kingdom, Singapore, Hong Kong and Switzerland, with 92 percent of their investments lodged in the stock exchange.

One trader sees a bright spot in the economic spat between U.S. and China.

"The Philippine markets continue to be perceived as a safe haven when U.S. stocks fell sharply after the Trump administration announced new tariffs on Chinese goods, further escalating tensions between the two largest economies in the world," said Luis Limlingan of Regina capital.

Another trader says that while trading today was higher than the 7,333.73 recorded in the Philippine stock exchange yesterday, it may be too early to be optimistic about the stock market.

"While the PSEi ended above its recent high, it might be too soon to be overly optimistic as the index still closed at practically the same level. Volume was also light at only ₱5.5B - a clear breakout would need a large accompanying volume," said Gio Perez of Papa Securities Corp.