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Peso sags to 48.54: $ after selloff in US stock market


The peso finished Wednesday weaker against the US dollar at 48.54 after fund managers reacted to an overnight selloff in the US stock market, and the subsequent fall of the local bourse. "We heard the term 'risk aversion' again. Investors shied away from emerging markets like the local peso and stocks and fled to US Treasuries after what happened in the US stock market," a currency dealer at a local bank told GMANews.TV. Earlier, the Philippine Stock Exchange composite index plunged almost 8 percent following Dow Jones' overnight retreat by 416 points, which in turn was in reaction to an 8.8 percent slide in the Shanghai stock exchange. At its weakest on Wednesday, the local currency traded at 48.65 against the dollar. It opened at its intra-day high of 48.48 against the greenback. Volume traded reached $677.14 million. "The opposite happened today. Before, markets all over the world watched what happened to the United States. Now, its activity in China that gets the world going," the trader said. Because of this and the fact that the Shanghai index recovered on Wednesday, he said that the peso's rally against the dollar will likely continue Thursday. "Losses today (Wednesday) are not a sign of a reversal of the peso's momentum. The market is resilient. We've seen the worst for now," he said. Stock market analysts said the same about the local bourse's drop. Earlier, the 30-company composite index closed lower by 263.84 points or 7.92 percent at 3,067.45. "This is just a knee-jerk reaction, a sympathy move by the local market, which prompted investors to take profits," Banco de Oro chief market strategist told GMANews.TV in a phone interview. Ravelas said the local sell-off is the major correction the market has been waiting for. He said, however, there is no reason to worry that the market may turn into a bear market in the short term. "The fundamentals remain strong," he added. The stock market decline earlier in the day was led by market heavyweight Philippine Long Distance Telephone Co., which lost P230 or 9.02 percent at P2,320. PLDT American Depositary Receipts shed $6.50 or 12.06 percent at $47.40 during the Dow Jones' 416-point overnight decline. PNOC-Energy Development Corp., the world's second largest producer of geothermal energy, fell P0.50 or 7.94 percent to P5.80. Office space developer Megaworld Corp. shed P0.25 or 7.58 percent at P3.05. Ayala Land Inc., the real estate unit of the country's largest conglomerate slid P1.25 or 7.58 percent to P15.25. Metropolitan Bank and Trust Co., the country's largest lender, lost P5.50 or 8.21 percent at P61.50. Losers clobbered gainers 159 against 4, while 6 issues were unchanged. Volume traded reached 23.18 billion valued at P12.62 billion. - GMANews.TV

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