The COVID-19 pandemic has barely made a dent on the Philippine peso, which remained stronger than the US dollar as of mid-April, given strong macroeconomic fundamentals, the Department of Finance (DOF) said on Monday (April 20).
In an economic bulletin, Finance Undersecretary and chief economist Gil S. Beltran noted that the peso strengthened against the greenback by 0.04 percent as of April 15—when it closed at 50.63:$1 from 50.66 at end-2019.
Among 12 Asian currencies covered by Beltran’s report, only the Hong Kong dollar and the Japanese yen appreciated more against the US dollar year-to-date, while the nine others weakened.
The peso was also stable, with its 0.26-percent coefficient of variation.
Of the 12 currencies, the peso was the least volatile and below the regional average of 1.94 percent during the four-and-a-half month period.
A currency’s volatility referred to the magnitude of fluctuation against the US dollar, such that a low rate meant relative stability.
Compared to a year ago, the peso’s year-to-date appreciation was lower than the 3.62 percent recorded in 2019, but less volatile than the 1.21 percent during the same period last year.
“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),” said Beltran.
“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,” Beltran said.
He also reported that the Philippines had a balance of payment surplus of $7.8 billion in 2019, “2.2 percent of GDP, the highest since 2012.”
“The GIR rose to $88.2 billon as of end-February, 6.5-percent higher than the same period last year and equivalent to 7.8 months of imports of goods and services,” Beltran reported.
“The GIR level was also 5.1 times the country’s short-term external debt,” Beltran noted.
“Strong macroeconomic fundamentals support the country’s financial position,” he said.
“The BOP surplus in 2019 was the highest in recent history. Manageable budget deficits and prompt adjustment of monetary settings in response to current developments help maintain investor confidence,” Beltran added.