MANILA, Philippines—The peso strengthened back to the 40-to-a-dollar territory on Wednesday as the euphoria over the upgrade in the Philippines’ credit rating to investments status superseded concerns over the unfavorable situation in the euro zone.
Reversing the previous day’s weakening to the 41 level, the peso inched up to close at its intraday high of 40.8 against the US dollar on Wednesday, up by 27 centavos from the previous day’s finish of 41.07:$1.
Intraday high low settled at 41.05:$1.
The weakening of the peso on Tuesday to the 41-to-a-dollar level happened as financial markets worldwide expressed concern over the debt woes in Cyprus that is seen to pose a significant challenge to efforts to resolve the crisis in the entire euro zone.
The capital market, however, left behind the worries of the previous day and bought peso-denominated assets on Wednesday in response to the upgrade of the Philippines’ credit rating.
Strong appetite for the pesos lifted the volume of trade to the $1-billion mark to hit $1.14 billion from $935.76 million previously.
The significant appreciation of the peso came following the release of a report that international credit rating firm Fitch Ratings raised the credit rating of the Philippines from BB+ to BBB-, or from one notch below investment grade to the minimum investment grade.
Fitch said the decision was based on encouraging macroeconomic fundamentals, including the country’s robust growth rate, rising foreign-exchange liquidity, declining debt burden, and benign inflation.
The international credit watchdog said the Philippines has shown resilience throughout the global economic crunch. The Philippines grew by 6.6 percent last year, registering one of the fastest growth rates during the period.
Traders said the upgrade in the country’s credit rating formalized the favorable outlook on the Philippine economy.