MANILA, Philippines- Davao City Mayor Rodrigo Duterte’s clear victory in the 2016 presidential race has been well received as the Philippine peso rose the most in six weeks against dollar, while the benchmark share index advanced the most since January.
A report by Bloomberg revealed that investors lost their interest weeks prior to the elections due to uncertainty on Duterte’s economic plans as well as his lack of economic policy-making experience. Investors were worried that whoever was elected president could find difficulty in generating the economic momentum brought by the nation’s current leader, President Benigno Aquino III during his term.
On Monday, May 9 as of 3:25 p.m. in Manila, the Philippine peso climbed 0.7% to 46.77 per dollar after initially plunging to as much as 0.3% from Friday’s close based on prices from the Bankers Association of the Philippines show.
Meanwhile, the Philippine Stock Exchange index climbed 2.6%, the most since January 27.
According to a senior Philippine bank trader in Manila, the rise in the peso could be attributed to the orderly elections with quick results as well as the concession of presidential candidate Sen. Grace Poe.
“The election went orderly for the most part with quick results and a candidate acknowledging defeat easily. That should support the peso momentarily,” the trader explained.
“We will likely get a honeymoon phase where the market gives him a chance to clear his position and policies,” he added.
But despite the peso’s good performance on Tuesday, May 10, analysts and traders still doubt about further strength in the currency.
Christopher Wong, a senior FX strategist for Maybank in Singapore, believes that local equities tend to be soft for a few months after elections, which reflect uncertainty surrounding the economic policies of Duterte.
“This tends to weigh on the peso,” Wong explained.
He added that the country needs a policy continuity to stabilize sentiment.