Peso rises on Moody’s ‘positive outlook’ on PH credit rating

MANILA, Philippines—The peso inched up on Tuesday, moving against other key Asian currencies, as the decision of Moody’s Investors Service to lift its outlook on the Philippines’ credit rating from “stable” to “positive” boosted appetite for securities from the country.

The local currency closed at 43.22 against the US dollar, up by 32 centavos from the previous day’s finish of 43.54:$1.

Intraday high hit 43.205:$1, while intraday low settled at 43.68:$1. Volume of trade amounted to $878.74 million from $881.2 million.

The appreciation of the peso came following the release of a report by Moody’s that it has changed its outlook on the Philippines’ Ba2 rating from “stable” to “positive” given the improving fiscal position of its government and the country’s improving macroeconomic fundamentals.

A “positive” outlook indicates the probability of an actual increase in the credit rating within the short term. A lift in the credit rating is likely if existing favorable trends in a country’s macro-economy are sustained.

The country’s Ba2 rating is two notches below investment grade.

Traders said the appreciation of the peso came as risk appetite of investors for peso-denominated instruments rose. They said the likelihood of a credit-rating upgrade by Moody’s within the short term is seen to increase investments and thus boost the economy. Consequently, fund owners would like to take advantage by investing in peso assets, traders said.

With the rise in investments in peso-denominated stocks, the Philippine Stock Exchange Index rose by 70.37 points to 5,023.11.