The Philippines peso surged to its strongest level in nearly two months as investors’ risk appetite improved from September’s overall pessimism.
After US Federal Reserve minutes showed officials were cautious over global growth prospects, Asian currencies rallied anew at the end of the week.
“Strength of Asian currencies since last week comes after the gloom of the third quarter that reflected excessive pessimism,” ING economist Joey Cuyegkeng said in a recent comment.
On Friday, the peso closed at 45.87-to-$1 from Thursday’s 46.11 to a dollar. The peso has been rallying all week as investors dumped the greenback in favor of emerging market assets with higher yields.
The peso’s rise Friday saw the currency stronger than the 46-to-$1 level for the first time since early August.
After opening at 46 to $1, the peso never looked back, rising to a high of 45.855 to $1. Volume stayed robust at $1.05 billion from Thursday’s $936.7 million in trades.
US monetary authorities kept interest rates at record lows last month, triggering the greenback’s recent slide. Minutes of the September Fed meeting showed that officials were waiting for evidence the American economy could weather the effects of on ongoing global slowdown.
“There are still risks ahead with the Fed rate hike still expected in the next six months,” Cuyegkeng said. “The strength could be temporary.”
The US Fed’s much-awaited rate increase this year would be the first in nearly a decade, spelling an end to a protracted period of record-low borrowing costs in the world’s biggest economy.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo said the Philippine economy was in a good position to weather turbulent market conditions.
Gross domestic product (GDP) growth prospects remained positive, he said, likewise citing the country’s ample external space courtesy of comfortable foreign reserves, consistent current account surpluses and declining levels of foreign indebtedness.