The peso continued its appreciation against the US dollar on Thursday on sustained confidence on the country’s solid macroeconomic fundamentals.
The local currency gained P0.10 to close at 48.84 from 48.94 on Wednesday. It was its strongest level in 45 months since the 48.66 on Nov. 10, 2016. Total volume traded stood at $632.1 million, down from $795.92 million on Wednesday.
“The peso is the most appreciated currency in Asia right now… it is stronger than the Japanese yen and Taiwan dollar. This is so because of the significant inflows of dollars in the country. Second is we have a high gross international reserves,” BSP Governor Benjamin Diokno said in a virtual briefing Thursday.
“Third, is the international confidence [on the economy. We got high ratings from global credit watchers Fitch Ratings, S&P Global Ratings and Moody’s Investors Service. So there is high confidence on the peso,” Diokno said.
Diokno said in the past, in times of crises, the country’s dollar reserves dwindled that resulted in the depreciation of the peso.
Because of the sound macroeconomic fundamentals, the country’s reserves stood at record high and the peso appreciated despite the COVID-19 pandemic.
Latest BSP data showed the country’s gross international reserves rose by $30.5 million to an all-time high of $93.32 billion as of end-June from the end-May level of $93.29 billion.
The BSP said the month-on-month increase in the GIR level reflected inflows mainly from the national government’s foreign currency deposits with the BSP. These inflows were offset, however, by the foreign currency withdrawals made by the national government to pay its foreign currency debt obligations.
It said the end-June 2020 GIR level represented an ample external liquidity buffer, which is equivalent to 8.4 months’ worth of imports of goods and payments of services and primary income.
Earlier, ING Bank Manila senior economist Nicholas Mapa said the peso continued to appreciate as the current account moved back to into surplus despite a projected decline in remittances this year.
As of July 8, 2020, the peso ranked first year to date among four currencies in Asia that maintained their value against the greenback.
Finance Undersecretary Gil Beltran said in an economic bulletin the peso appreciated 2.21 percent relative to the dollar, ranking first among Asian currencies, including the Hong Kong dollar, Taiwan dollar and Japanese yen, which appreciated by 2.07 percent, 1.68 percent, and 0.87 percent, respectively.
Earlier, the interagency Development Budget Coordination Committee narrowed the range of the peso-dollar exchange rate assumption to 50 to 52 against the dollar for 2020 and maintained at 50 to P54 from 2021 to 2022.
The peso ended 2019 at 50.635 per dollar, stronger by 1.945 compared to 52.58 a year ago.