Investors will be looking toward key support areas for the Philippine Stock Exchange Index (PSEi) as central banks in the Philippines and the United States are expected to continue their aggressive monetary tightening this week to cool surging inflation.
The PSEi shed 0.87 percent last week to end Friday at 6,548.78 while the Philippine peso reached a new record low against the US dollar at P57.43.
The US Federal Reserve would meet on Sept. 21 while the Bangko Sentral ng Pilipinas’ (BSP) meeting was set for the following day on Sept. 22.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the influential Federal Reserve was expected to raise the key interest rate by at least 75 basis points after US inflation in August reached a higher than expected 8.3 percent.
He said the BSP could gradually hike rates by 25 basis points but there was potential for these to be “higher/more aggressive, as a [result] of the weaker peso exchange rate recently.” He also took note of recent news that remittances from overseas Filipino workers (OFW)s, which help stabilize the peso, posted a weak growth in July as “higher inflation and interest rates dragged [down] the global economic recovery as well as some OFW jobs/incomes.”
For the PSEi, Ricafort said immediate support levels were seen at 6,500 while “major” support was pegged at 6,400 to 6,370. An upside move would see immediate resistance from 6,634 to 6,701 with major resistance around the 6,750 level.