The financial community brushed aside the sixth and final State of the Nation Address (Sona) of President Aquino, saying that the hours-long elocution should have little to no influence on the markets at all, economists said.
Bank of the Philippine Islands (BPI) economist Nicholas Mapa and ING Bank Manila chief economist Joey Cuyegkeng said the presidential speech on Monday proved to be of little significance to the financial markets, and has not affected trading at the local currencies and equities markets either way.
“Nothing truly compelling in this Sona. Expect more campaigning in the coming months,” Mapa said in an e-mailed response to the BusinessMirror.
“The State of the Nation Address of the President is unlikely to cast a strong influence on the market,” Cuyegkeng said.
A day after the President’s two-hour Sona, the local currency closed 6 centavos stronger to 45.5 per dollar, from the previous day’s close of 45.56 per dollar.
“There was a lot of comparison with the previous administration, but, perhaps, the better measure would have been to measure his performance against potential, which this administration failed to maximize,” Mapa further said.
But, while the presidential speech absolutely had no bearing on how the local currency traded at the Philippine Dealing & Exchange Corp., the peso was seen weakening some more in the immediate term due to the Bangko Sentral ng Pilipinas’s (BSP) lack of action on its monetary-policy stance.
“The peso could remain on the defensive. After breaking above the five-year high on Monday morning and absence of monetary-policy support, especially with some analysts in the past two weeks calling for monetary easing via an RRR [reserve requirement ratio] cut, the peso may be targetting 45.75 per dollar,” Cuyegkeng said.
But, despite the forecast continued deceleration of inflation and weak financial-market sentiment, Cuyegkeng said the BSP was likely to keep the monetary- policy settings unchanged at the next monetary-policy meeting.
BSP Gov. Amando M. Tetangco Jr. earlier said inflation in July this year could range from 0.5 percent to 1.3 percent.
“The BSP is likely to keep policy settings steady for now, despite very near-term disinflation and higher financial-market volatility…. BSP monetary policy-makers have argued that the tightening in 2014 was in response to market apprehension of US Fed tightening,” Cuyegkeng said.
The BSP will be having its next monetary-policy meeting on August 13.