25 February 2011
USD/PhP: 43.84 PSEi: 3737.04 + 6.20
USD/JPY: 81.90 PFINC: 818.30 - 2.13
EUR/USD: 1.3822 BDO: 46.50 - 0.40
GBP/USD: 1.6146 BPI: 53.00 - 0.20
PDSTF3M: 1.9000 MBT: 56.95 - 0.30
Prices as of 12:00pm Source: Bloomberg, Reuters
Philippine Interest Rate Outlook
Secondary money market rates moved down by an average of 34 basis points as short-term rates fell. Investors flocked to the safety of government securites as risk aversion rose following the wide spread civil unrest in the Middle East and North Africa (MENA). This caused oil prices to rise above the US$100/bbl for the first time since 2008.
The current drop in yields is viewed as a mere correction following the rise in rates a few weeks ago . We remain comitted to see interest rates to inch upwards in the near future as rising global commodities prices will further fan inflation concerns.
Philippine Equities Outlook
Local shares plunged 2.67 percent to 3737.04 as tensions in the MENA region triggered a global sell-off in the equity markets. Investors fear that a prolonged uncertainty in the Middle East could stall the global recovery as it aids global commodity prices to new highs. This condition could fan inflation in the medium term causing some upward adjustment in interest rates.
Chartwise, the week’s close at 3737.04 continues to imply further tests towards the 3,600 levels in the near-term. Expect some bargain hunting near the said levels. Support and resistance is seen at 3,600 and 3,800 levels, respectively.
Philippine Peso Outlook
The local currency depreciated against the dollar as investors sought safe haven in US dollar as current geopolitical risks rises in Middle East. Near-term demand for the greenback grew after crude oil rose to its highest level since 2008 at US$100/bbl.
Chartwise, current movement of the exchange rate confirms a near-term bottom at the 43.25 levels. A close above the 44.00/44.10 levels will signal a retest of the 44.50 levels.
Immediate support and resistance is seen at 43.50 and 44.00 levels, respectively.
BDO UNIBANK INC.
Jonathan Ravelas
Chief Market Strategist
(632) 858-3145
Rhys Cruz
Junior Researcher
(632) 858-3001
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