The peso returned to the 51-per-dollar level for the first time in almost 10 months on Wednesday, driven mainly by the good inflation forecasts coupled with the easing political tensions between the US and North Korea.
The local currency gained P0.11 and closed at 51.91 per greenback. That was its strongest level since the 51.8 on May 10, 2018. The total volume turnover reached $1.147 billion, up from $909 million last Tuesday.
Bangko Sentral ng Pilipinas deputy governor Diwa Guinigundo said the continued resurgence of the peso could be attributed to the strength of the dollar inflows for bonds as well as corporate receipts.
“Positive market sentiment continues with good inflation forecasts for 2019 and 2020, as well as the expected message of sustained patience of the US Fed monetary policy,” Guinigundo said.
“It looks like the more favorable prospects of US and North Korea relations also added some strength to the local currency.”
The peso reached its weakest level against the greenback in 2018 at 54.325 on Sept. 26 on the back of the lingering trade tensions between the world’s leading economic powerhouses the United States and China.
The peso closed 2018 a bit stronger at 52.58, and opened 2019 at 52.515 on Jan. 2.
Earlier, Bank of the Philippine Islands said in a report that since inflation had been decelerating, the local equity market might see strong foreign inflows that could give support to the peso in the near term.
Inflation averaged 5.2 percent in 2018. It peaked at a nine-year high of 6.7 percent in October before easing to 6 percent in November and 5.1 percent in December.
In January 2019, inflation further eased to a 10-month low of 4.4 percent, as the immediate measures implemented by the government to curb higher prices took effect.
But BPI did not discount the possibility that the local currency “may continue to weaken against the dollar in the medium term as the country’s trade deficit is likely to remain elevated, with additional depreciation pressure coming from global uncertainties.”
