Peso hits highest value in 5 years at 40.70 to dollar

AFP PHOTO

MANILA, Philippines—The peso closed at a new five-year high on Thursday, buoyed by higher risk appetite among investors who believed the Philippines would continue to enjoy rising dollar inflows over the short term.

The local currency closed at 40.70 against the US dollar, up by 8.5 centavos from the previous day’s finish of 40.785:$1.

It was also the strongest in nearly five years. The last time the peso closed stronger was on March 6, 2008, when it hit 40.56:$1.

Intraday high hit 40.69:$1, while intraday low settled at 40.79:$1. Volume of trade amounted to $1.23 billion from $773 million previously.

Some investors see the peso to rise further, citing government projections that remittances and foreign investments in the business process sourcing sector will remain robust. Yield seekers would like to take advantage of the situation by purchasing peso-denominated securities.

“The strength of the peso is being driven by the strength of the balance of payments, particularly components of the current account. Remittances remain solid and there are aggressive expansion plans in the BPO sector,” Sameer Goel, head for Asian rates and currency strategy at Deutsche Bank, said in a press briefing Thursday.

Deutsche projects the peso to strengthen to the 38-to-a-dollar territory by the end of this year.

Remittances were estimated to have amounted to over $21 billion last year. The BPO sector is projected to sustain double-digit growth over the next few years, aided by foreign investments.