The peso Wednesday climbed to a 41.31 to the dollar, defying a regional currency market downtrend caused by concerns on a smaller-than-expected interest rate cut by the US Federal Reserve.

The peso opened trading near the day’s low of 41.54 to the dollar but closed at the day’s peak of 41.31, supported by strong inflows of foreign exchange from overseas Filipinos, currency traders said.

Gaining further from Tuesday’s close of 41.40 to the greenback, the peso has risen nearly 19 percent against the dollar and is at its highest level since touching 41.28 on May 10, 2000. It has been Asia’s best-performing currency since the start of the year.

The Indonesian rupiah, Korean won, Taiwanese dollar and Malaysian ringgit faltered against the dollar on concerns in Wall Street that the “too little, too late” US Fed interest rate cut would again revive aversion to emerging market assets.

Trading on the currency spot market was heavy at $622.3 million, compared with the previous day’s $502 million.

Currency traders believe the only way to temper the peso’s rise is for the central bank, Bangko Sentral ng Pilipinas to again slash interest rates during its next policy rate setting on Dec. 20.

The Fed on Tuesday (Wednesday in Manila) cut its interest rate by a quarter of a percentage point to 4.25 percent, in its third rate cut in a monetary easing cycle.

Many were hoping for a more aggressive intercession to prevent a recession in the world’s biggest economy that is besieged by a credit crunch arising from the subprime mortgage crisis that erupted earlier this year.

Traders said the peso was not affected as much as other currencies in the region because of the strong foreign exchange inflows from overseas Filipino workers to their families ahead of the Christmas season. Edited by INQUIRER.net