Philippine markets enter Monday under renewed pressure, with the PSEi vulnerable to a test of 5,500 and the peso hovering near P63 to the dollar as investors await September inflation and reassess the outlook for monetary policy.
The PSEi fell 3.4 percent last week to 5,629.03, extending its losing streak to four consecutive weeks and marking its sixth decline in seven weeks. The weakness reflects a broader liquidity squeeze, with elevated fixed-income yields continuing to compete with equities for investor funds. Foreign selling also intensified, reaching USD72.8 million from USD12.7 million a week earlier.
The immediate catalyst is Tuesday’s inflation report. The Bangko Sentral ng Pilipinas expects September inflation at 6.4 percent to 7.4 percent, leaving the market particularly sensitive to any upside surprise. A reading near or below 6.5 percent could support a relief rally toward 5,800, according to 2TradeAsia, while inflation at 6.8 percent or higher could reinforce expectations for a fourth consecutive 25-basis-point rate increase on Oct. 22 and put 5,500 within reach.
The peso offers a somewhat more mixed picture. It closed Friday at P62.535 per dollar after weakening to P62.775 earlier, prompting RCBC chief economist Michael Ricafort to describe the move as a healthy correction. He identified P62.70-P62.75 as immediate resistance, followed by the record intraday low of P62.925 and the psychologically important P63 level.
Near-term dollar inflows from the government’s retail Treasury bond offering and the Mynt/GCash IPO could provide some support. Still, inflation, oil prices and expectations for further BSP tightening are likely to dominate trading. Markets may therefore remain defensive until the inflation signal clarifies whether rate pressures are intensifying or beginning to ease.
