Philippine Weekly Economic Recap: Oct. 1-5
October 9, 2007
Market-moving news for the week ended October 5, 2007:
BSP cuts key interest rates
The Bangko Sentral ng Pilipinas (BSP) reduced the overnight borrowing rate and overnight lending rate by 25 basis points to 5.75% and 7.75% from 6.0% and 8.0%, respectively, during its Monetary Board meeting last 4 October 2007. The Monetary Board adjusted the key policy rates for the second time this year. The BSP considered the benign inflation outlook in its decision to cut its key policy rates. The central bank noted that risks to inflation remain but these are mitigated by the stronger peso that provides a buffer against rising global commodity prices, and by recent policy measures that eases the impact of strong foreign exchange inflows on domestic liquidity.
Peso breaches P44 level
The peso breached the P44:US$1 level and closed the week at P44.75 per dollar. The close was 0.64% higher than the previous close of P45.04 per dollar on 28 September 2007.
Inflation rate rises
Inflation rate picked up to 2.7% in September from 2.4% in the previous month. This brought the average inflation for the first nine months of the year to 2.6%. The increase in inflation rate was due to the accelerated price increases of food, beverage and tobacco, and services to 3.5% and 2.4% from 2.5% and 1.8%, respectively, in August. Meanwhile, core inflation went down to 2.7% from 2.9% in August.
Philippine gross international reserves increase
The country’s gross international reserves rose further to US$30.7 billion as of end-September from US$30.5 billion in August, surpassing the year-end target by US$0.7 billion. The strong build up in reserves was attributed to the sustained foreign exchange inflows and the income from investments abroad.
Government treasury bond fetches 6.501%
The 7-year Treasury bond offered by the government, during the auction held on 4 October 2007, fetched an average rate of 6.501%, 62.4 basis points lower than the 7.125% rate at the auction on 31 October 2006. Total tenders amounted to P19.55 billion against the offer size of P7.0 billion.
Philippine composite index up 5.7% last week
The PSEi closed the week at 3,775.91 points, up by 5.7% or 203.01 points from the previous close of 3,572.90 points, buoyed by the central bank’s decision to cut the key interest rates. The share price of Megaworld Corporation had the highest week-on-week increase among index companies, surging by 23.2% to P4.25 from P3.45. It was followed by stock prices of Metropolitan Bank & Trust Company, Globe Telecom, Inc., and SM Investments Corporation, which increased by 12.5%, 10.2%, and 10.1%, respectively.