The Philippine peso extended its rally on Thursday, strengthening to the 62-per-dollar level as a sweeping Democratic victory in the US midterm elections sent the greenback, oil prices and Treasury yields lower.

Philippine shares also ended higher, buoyed by optimism over a possible end to the war in the Middle East.

The local currency gained 56.5 centavos to close at 62.97 against the dollar, according to data from the Bankers Association of the Philippines.

This was the peso’s strongest closing level since Oct. 14, when it finished at 62.87. The currency also touched an intraday high of 62.90 on Thursday.

Trading activity picked up, with more than $2 billion changing hands, up from $1.3 billion in the previous session.

The dollar fell to a more than one-month low on Thursday as the midterm election results fueled expectations that President Donald Trump would face greater resistance to his policy agenda, including his approach to the US-Israeli war on Iran and trade tariffs, Reuters reported.

The euphoria spilled over into Philippine markets, which endured intense volatility last month as rising oil prices and expectations of higher interest rates abroad weighed on investor sentiment.

“The peso’s rebound was largely driven by a weaker dollar and improved market sentiment, with the US midterm election results likely providing some support,” Robert Dan Roces, group economist at SM Investments, said.

“Lower oil prices and profit-taking on dollar positions may have also helped. For now, this looks more like a relief rally than a sustained reversal, but it gives the peso some breathing room,” Roces added.

Ruben Carlo Asuncion, chief economist at UnionBank of the Philippines, said some near-term consolidation would not be surprising given that the peso’s appreciation has been quite rapid.

“The Democratic sweep has pushed oil and US Treasury yields lower and weakened the dollar, a combination that is particularly favorable for the Philippines as a net energy importer,” Asuncion said.

“Lower oil helps the inflation and external-balance outlook, while the softer dollar provides direct support to the peso,” he added.

Stocks up

By the end of the trading session, the Philippine Stock Exchange index rose by 1.46 percent, or 83.22 points, to finish at 5,778.14.

The broader All Shares Index likewise edged higher by 1.39 percent, or 44.32 points, to 3,229.47.

Only the financials closed in the red, with conglomerates and mining and oil logging the highest gains.

Foreigners were net buyers, providing a boost in the rally, with net inflows at P565.66 million.

Trading activity, however, remained weak, with net value turnover at 5.83 billion.

“The local market extended its rally today fueled mainly by the drop in global oil prices. This comes as the Democratic Party takes over the US Congress following their big win in the midterm elections,” Financial Inc. research manager Japhet Tantiangco said.

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“A Democratic Party-leaning Congress is expected to challenge the US’ war against Iran,” he added.

Since the war in the oil-producing region began late in February, global fuel prices have been on the rise, with local pump prices even reaching the P100-per-liter mark during the height of the bombing attacks.

The strengthening of the peso against the US dollar also helped lift investor sentiment, according to Luis Limlingan, head of sales at Regina Capital Development Corp.

“However, the domestic market is expected to remain cautious as elevated inflation print continues to pose upside risks, potentially influencing the BSP’s (Bangko Sentral ng Pilipinas) next monetary policy decision,” Limlingan added.

Winners outnumbered losers at 122 to 74, with 56 issues unchanged.

Jollibee Foods Corp. was the index’s top gainer, climbing by 7.89 percent. Metropolitan Bank and Trust Co., meanwhile, was the main laggard after declining by 3.17 percent.