Peso rises on reports of higher US homes sales, hiked PH public spending

MANILA, Philippines—The peso led other key Asian currencies in appreciating against the US dollar on Tuesday following reports that US home sales rose and that the Philippine government boosted public spending in May.

The local currency closed at 42.47 against the US dollar, up by 17 centavos from the previous day’s finish of 42.64:$1.

Intraday high hit 42.46:$1, while intraday low settled at 42.58:$1. Volume of trade amounted to $832.41 million from $902.36 million previously.

The rise of the peso came after reports said purchase of homes in the US grew in May to its highest level since April 2010. Traders said the rise in home purchases in the United States indicated improving purchasing capacity of consumers.

They said this would bode well for the US economy, which has been serving as key export market and source of foreign investments for many emerging markets like the Philippines.

Meanwhile, the Philippine government reported that it incurred a budget deficit of P19.9 billion in May versus a P31-billion surplus in April.

The deficit in May was attributed to increased expenditure on infrastructure, thus addressing concerns of underspending. While a budget surplus is normally favored over deficit, economists say there are times when a government has to engage in deficit spending to boost the economy.

The government has said higher spending would help achieve the official target of making the Philippine economy grow by 5 to 6 percent this year, faster than last year’s 3.9 percent.