The peso yesterday crossed the psychologically important barrier of 43 to the US dollar, hitting a high of 43.80. its strongest since June 4, before closing at 43.82.

Share prices rose by 3.64 percent. Marcelo Ayes, senior vice president of Rizal Commercial Banking Corp. yesterday said the peso and local stocks are tracking the movement of world oil prices which fell to $118 per barrel, a three month low.

Ayes added that the market also reacted positively with the US Fed decision of holding interest rates steady.

The Federal Reserve held US interest rates steady on Tuesday, expressing concerns about both economic growth and inflation and indicating it is in no rush to push borrowing costs higher.

The 10-1 decision by the US central bank leaves the benchmark federal funds target at a low 2 percent, where it has been since April.

The total value of transactions at the Philippine Dealing System was a record $1.2 billion.

The peso has lost 6 percent this year, a big turnaround from 19 percent ains in 2007. Crude oil is the Philippines’ second biggest import item.

"Lower oil prices is the main factor pushing the peso at the moment," a trader in said.

He said that despite strong dollar selling pressure, he expected the central bank to intervene by buying dollars to cap the currency to prevent excessive peso movement.

Market expectations that authorities would fight growing inflationary pressures in the Philippines and Indonesia through an appreciating exchange rate also led investors to bet on their currencies.

The Philippine Stock Exchange index (PSEi) went up 94.83 to 2,697.21, a 3.64 percent increase. Gainers edged losers 107 to 21 with 39 stocks unchanged.

Trading turnover reached P3.67 billion.

"The market went up primarily because of Dow Jones. It went up because oil went down anew. If oil continue to go down, we should be ok," said Irving Ackerman.

Ackerman also said that yesterday’s decline gave market players the opportunity to sell.

"It was a very, very nice day," he said.

Most actively traded Philippine Long Distance Telephone Co., was up P45 to P2,570. Banco de Oro Unibank, Inc., is up P1.50 to P42. Ayala Corp. was up P17.50 to P315.

Megaworld Corp., was up P0.10 to P1.70. Aboitiz Power Corp., was up P0.10 to P5.70. Philippine National Oil Co. Energy Development Corp., was up P0.05 to P4.60.

"Today’s price actions in Asian foreign exchange markets reflect the response to lower oil prices, the US Fed action and the firm US dollar tone," said Christy Tan, a strategist at Bank of America in Singapore.