What are the financial markets responding to?
April 11 ended with the peso going back to 49.58, while the Philippine Stock Exchange index (PSEi) reached 7,601.40. At these levels, the peso has already appreciated by 1 percent and the PSEi has gained 11.4 percent year-to-date. Just about two weeks ago, investors have been jittery over the sideways and lackluster movement of the PSEi and the seeming freefall of the peso toward 51. What is happening with the financial markets? Usually, they move in relation to economic and political news. The most recent economic data that came out points to some weakening to the otherwise strong growth performance last year. Specifically, unemployment rate for January 2017 rose to 6.6 percent of the labor force, up from 4.7 percent posted in October 2016 and from the 5.7 percent in January 2016. Inflation, meantime, reached 3.4 percent, the highest in the last 30 months. The peso breached 50 to $1 in mid-February and the recent pronouncement of Credit Suisse that the country’s current account is reaching deficit levels and that could lead the peso to breach 51 in 12 months.