Peso hits strongest level in six months
The Philippine peso cleared another milestone toward stronger positions against the US dollar, closing at 54.87:$1 on Jan. 10 or its firmest showing since 54.77:$1 more than six months ago on June 28, 2022.
On Tuesday, the local currency traded at as strong as 54.80 and at as weak as 54.95 following a closing rate of 55.11 a day earlier.
This happened as, according to ING Bank, the foreign exchange markets continued to trade with cautious optimism on the view that a slowdown in the United States can rein in further interest rate hikes by the US Federal Reserve.
ING Bank also noted that optimism about a reset in China’s COVID-19 policies might eventually see resurgent consumer demand and perhaps even improved foreign relations.
“This comes at a time when the market is growing increasingly confident that the Fed will end its tightening cycle this quarter and embark on an easing cycle in the third quarter,” the Dutch group said.
“Emerging markets are back in fashion after a tough couple of years,” it said, banking on the view that the reopening of China’s economy can see a strong recovery in emerging market currencies against the dollar.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp. said that a significant narrowing in the Philippines’ trade deficit in recent months —especially from October-November 2022—may have fundamentally helped stabilize and even improved the peso-dollar exchange rate.
Ricafort said the exchange rate is now relatively stable and even stronger when compared to 59:$1 in October 2022.
He said the peso also strengthened after crude oil prices hit three-week lows alongside the decline in other commodity prices due to a milder Northen Hemisphere winter.