Peso strengthens on ratings upgrade
Local assets seen attracting more foreign investorsBy Michelle V. Remo |Philippine Daily Inquirer
The peso strengthened back to the 40-to-a-dollar territory Friday to hit its highest finish in four weeks as financial markets cheered the decision of Standard & Poor’s to give the Philippines an investment-grade rating.
The local currency closed at 40.91 against the greenback, up 14 centavos from Thursday’s close of 41.05:$1. Intraday high hit 40.90 to $1 while intraday low settled at 41:$1. Volume of trade amounted to $997.1 million.
“The investment grade gave a boost to Philippine assets, thereby causing the peso to appreciate,” said Jonathan Ravelas, market strategist for Banco de Oro.
The appreciation of the peso came as the Philippine Stock Exchange Index (PSEi) breached the 7,200 mark to close at a new record high of 7,215.35.
Traders said peso-denominated securities became even more attractive with the upgrade last Thursday of the country’s credit rating from S&P. The move of S&P to raise the country’s credit rating by a notch from BB+ to BBB-, the minimum investment grade, followed a similar move done by Fitch Ratings in March.
The two credit-rating agencies cited the country’s favorable macroeconomic fundamentals in their decisions. These included rising foreign-exchange reserves, a declining debt burden of the government, benign inflation, robust economic growth rate and a stable banking system.
With the investment grade ratings, some traders expect the peso to stay as one of the most expensive Asian currencies this year.