The peso emerged as the second-fastest appreciating currency in Asia and the fourth-fastest among all actively traded currencies in the world in 2012, the Bangko Sentral ng Pilipinas said.
The regulator admitted that an even greater challenge in 2013 could be expected, as far as keeping the peso stable is concerned, given the encouraging outlook on the domestic economy.
Data from the central bank showed that the peso rose by 6.8 percent against the US dollar in 2012. On the last trading day of the year, it closed at 41.05:$1.
The significant appreciation of the peso was attributed to the rise in foreign exchange inflows, composed largely of remittances from overseas Filipino workers, foreign investments in peso-denominated portfolio assets, and foreign investments in the country’s business process outsourcing (BPO) sector.
The Korean won was the fastest appreciating currency in the world, rising by 7.78 percent against the US dollar.
The Turkish lira was the second-fastest worldwide, inching up by 7.17 percent against the greenback.
The New Zealand dollar came in third in the global ranking as it rose by 6.81 percent against the US dollar.
The Singapore dollar landed on the fifth spot, appreciating by 6.51 percent.
Other currencies that settled in the Top 10 in 2012 are Taiwanese dollar (up by 4.25 percent) British pound (4.14 percent), Malaysian ringgit (3.77 percent), Thai baht (3.66 percent), and Swiss franc (3.38 percent).
BSP Governor Amando Tetangco Jr. said the central bank would maintain its policy of allowing the peso’s value to be determined by the market. But the regulator said it could step in at any time to avoid the sharp rise or fall of the local currency.
Tetangco also said the central bank would intervene, such as by trading currencies in the market, if currency speculation were to influence the peso’s movements.
The regulator explained that it preferred “structural flows”—or legitimate investments and foreign exchange-requirements of firms, and remittances—to influence the peso.
Citing market projections, Tetangco said the peso would remain firm in 2013 due to a string of favorable factors.
Amid a weakening global economy, the Philippine government expects the country to grow between 6 and 7 percent, this year.
Also, the central bank estimates inflation to stay modest at below 4 percent in 2013.
Moreover, economists from the government and the private sector said that the Philippines could get an investment grade this year given favorable comments by credit-rating firms on the country.
The Philippines is currently rated just a notch below investment grade by all major international credit rating agencies.