Peso among Asia’s top gainers vs US dollar
The peso was one of only four currencies among developed and emerging economies in Asia that strengthened against the US dollar to date and this can be attributed to the Philippines’ strong macro economic fundamentals, according to the Department of Finance (DOF).
In an economic bulletin, DOF Undersecretary and chief economist Gil S. Beltran said that as of March 10, the peso had appreciated by 0.28 percent versus the greenback, joining the Japanese yen, Hong Kong dollar and Chinese renminbi among year-to-date gainers.
On the other hand, the Indian rupee, Singaporean dollar, South Korean won, Thai baht, Vietnamese dong, Malaysian ringgit, Indonesian rupiah and the Taiwanese dollar had weakened against the dollar in the same period, Beltran noted.
“Despite the volatility in the global economy, made more uncertain by the spread of COVID-19, the collapse of global stock markets and trade restrictions imposed on each other by the world’s top trading economies, the Philippine peso remained firm,” Beltran said.
Last year, the peso appreciated against the US dollar by 3.62 percent.
“The peso-dollar exchange rate also remains stable throughout the [end-March 10] period, its coefficient of variation at 0.27 percent, ranking second behind the Vietnamese dong among 12 regional currencies and lower than the 1.19-percent Asian average. The Vietnamese dong was the beneficiary of export producers moving out from China,” Beltran added.
For Beltran, “the main reasons for the peso’s growing strength and stability are the country’s strong balance-of-payments (BOP) position and rising gross international reserves (GIR).”
The Philippines ended 2019 with a $7.8-billion BOP surplus—the biggest since 2012, while the GIR increased to $87.8 billion as of February this year.
“Strong foreign exchange inflows from exports of services, remittances, income from investments abroad, direct foreign investments and foreign borrowing all contributed to the strong BOP position. These in turn boosted the confidence in the Philippine peso,” according to Beltran.
Despite the uncertainties being brought about by the COVID-19 pandemic worldwide, Beltran said “strong macroeconomic fundamentals support the country’s financial position.”
Beltran said “manageable budget deficits and prompt adjustment of monetary settings in response to current developments help maintain investor confidence.”