Peso Edges Higher, PSEi Flat Ahead of August Price Data

Introduction

The Philippine peso strengthened on Wednesday, September 7, against the US dollar, while the stock market ended flat ahead of the release of August inflation data.

The local currency gained 10 centavos to close at 56.22:$1 from 56.32:$1 on Tuesday, according to data from the Bankers Association of the Philippines.

This was a reversal of the peso's 24-centavo depreciation on Tuesday, which snapped its four-day rally.

Market Performance

The Philippine Stock Exchange index (PSEi) ended flat at 6,883.55, down 1.79 points or 0.03% from the previous day's close of 6,885.34.

The broader all-shares index also ended flat, inching up 0.94 points or 0.02% to close at 4,272.29 from 4,271.35.

Seventeen of the 20 sectoral indices advanced, led by the property index, which climbed 1.17%. The mining and oil index gained 1%, while the holding firms index rose 0.76%.

Inflation Data

The Philippine Statistics Authority (PSA) is scheduled to release the August inflation data on Thursday, September 8.

Analysts are expecting headline inflation to have accelerated to 6.7% in August from 6.4% in July.

If confirmed, this would be the fastest inflation rate since October 2018.

Impact on Market

The release of the August inflation data is likely to have a significant impact on the market.

A higher-than-expected inflation rate could lead to further depreciation of the peso and a sell-off in the stock market.

On the other hand, a lower-than-expected inflation rate could boost the peso and support the stock market.

Conclusion

The peso strengthened against the US dollar on Wednesday, while the stock market ended flat ahead of the release of August inflation data.

Analysts are expecting headline inflation to have accelerated to 6.7% in August from 6.4% in July.

The release of the inflation data is likely to have a significant impact on the market.