By VG Cabuag & Bianca Cuaresma
The local currency was back on its feet on Thursday, only a day after concerns on the hostilities seen in Mindanao, indicating market confidence over the country’s overall economic prospects.
On Thursday the peso reverted back to hit 49.83 to a dollar, with $551.5 billion total traded volume for the day. Data from the PDS Group also showed that the peso traded between the 49.95 and 49.82 range to a dollar on Thursday.
This shows relative strength for the local currency, after markets showed concern over the clash in Marawi City—which prompted President Duterte to declare martial law in Mindanao on Wednesday.
In particular, the local currency hit the 50 level on Wednesday at the height of the attack of the terrorist organization Maute Group in Marawi City. The peso then traded between 50 to a dollar and 49.93 to a dollar to close the day’s trade at 49.995 to a dollar—just half a centavo away from returning to the P50 territory.
The weakness in the peso has been expected by the central bank, with BSP Governor Amando M. Tetangco Jr., saying the volatility is a display of “transitory or temporary cautiousness” in the market due to the developments in Mindanao.
A trader on Thursday also confirmed that markets were less concerned over the hostilities in Mindanao, the declaration of martial law in the area and its overall impact on the economy. “Martial law is a cause of concern, of course, but until we see it escalate to the bigger cities, it’ll just be something to worry about,” the trader said.
Morever, foreign-exchange players are now more concerned over global developments, particularly the potential movements in the US’s interest rates.
“FOMC [Federal Open Market Committee] minutes from the May meeting showed dovish
undertones, with officials opting to await further evidence that the first quarter slip in US growth was indeed transitory before they hike aggressively,” the trader said.
“Although market expectations still point to a hike in June with the minutes also flagging the Fed’s desire to adjust policy ‘soon’, the dovish undertones suggest that the third rate hike may not come as easily,” the trader added, explaining that these new developments are what broadly drove market sentiment during the day.
ING Bank Manila economist Joey Cuyegkeng also earlier said that financial markets impact from the clash in Mindanao is likely to be limited and calm likely to return after the initial reaction.
The benchmark Philippine Stock Exchange index (PSEi) again ended the day’s trade higher on Thursday. The PSEi rose 33.83 points, or 0.43 percent, from the previous day’s trade to hit 7,871.65 points.
Luis Limlingan, managing director of Regina Capital and Development, said the sudden declaration of martial law in Mindanao did not spook investors but it is mainly buoyed by US stocks closing slightly higher.
Limlingan said the market appears to have boxed the domestic risk and set it aside for the moment.
The last two days have moved following a similar pattern—weakness at the open posting marginal gains at the noon break before a controlled move to the buy-side to push the measure higher at the closing bell, said Justino Calaycay Jr., senior research head Philstocks Financial Inc. “Bargain-hunting may be the key factor. A couple of index heavyweights, battered over the recent past, have attracted attention, value-wise.
“Having said this, we still expect the market to continue a generally sideways pattern but with a hint of upside bias,” he said.
‘Stand with Marawi’
Leaders of various nonprofit organizations and faith-based institutions has called on the public to speak in solidarity with the locals of Marawi City, Lanao del Sur, who witnessed the terror attack of the Maute Group on Tuesday.
In a statement, public policy center Institute for Autonomy and Governance (IAG) condemned the reign of terror in Marawi City. The Cotabato City-based group said violent extremism, which the Maute Group displays, has no place in Mindanao.
“The voice of reason and respect for the dignity of every human being as a shared value of the great religions of the world must prevail over few loud voices who threaten to destroy humanity and our way of life,” the statement read.
IAG urged the public to stand unified in the face of terrorism and extremism, instead of going against each other over political color divide. It added, “Business and civil-society leaders must voice and act out their condemnation of this global scourge that will condemn people and communities to poverty and despair.”
The group also noted violent extremism is not solely a law-enforcement issue, but is a crisis driven by weak and failed governance, referring to regional and local political leaders of the Autonomous Region in Muslim Mindanao.
Amid the ongoing siege, the Mindanao Development Authority (MinDa) asked Mindanaoans to stay the course, that is, to “be vigilant, but continue to be warriors of peace by spreading hope, not fear”.
The agency said now is the perfect time to set aside political and religious differences to work toward helping Marawi City and the rest of the island rise from the ashes.
“Let us show the world that Mindanaoans can stand as one, even amidst adversities,” MinDa said.
“The Mindanaoan spirit is resilient. It is without doubt that we can overcome this atrocity and end up victorious in our fight for justice, equality and peace. Wasalaam [Peace be unto you],” it added.
In a message to the locals of Marawi City, Archbishop of Manila Luis Antonio G. Tagle said Catholics in Manila are one with their brothers and sisters in the conflict area.
He said the Catholic Church, along with the Filipino people, weeps for the violence locals of Marawi City have to suffer and witness.
Archbishop of Cotabato City Orlando B. Quevedo pleaded to the hostage-takers not to harm the innocent as what the Islamic faith teaches. “I appeal to religious leaders of Islam to influence the hostage-takers to release the hostages unharmed. For God’s will is the safety of innocent people,” Quevedo said.
The Maute Group, which laid siege upon Marawi City on Tuesday, took with them priest Chito Suganob and church servants of the Cathedral of Our Lady Help of Christians.
Catholic Bishops Conference of the Philippines President Socrates B. Villegas told the government that, while it enforces the law upon the Islamic militants, it must also ensure the safety of the hostages.
“At the time of his capture, Suganob was in the performance of his ministry as a priest. He was not a combatant. He was not bearing arms. He was a threat to none. His capture and that of his companions violates every norm of civilized conflict,” Villegas said. Mindanao is presently under martial law, with the privilege of the writ of habeas corpus suspended while soldiers perform their duty in securing the island from Islamic militants.
With a report from Elijah Felice E. Rosales