Peso hits 4-year high
The peso opened weaker at its intraday low of 48.13 from Thursday’s close of 48.115 before gaining to hit an intraday high of 48.055. Volume jumped by 36 percent to $783.4 million from $575.71 million last Thursday.
KJ Rosales

Peso hits 4-year high

Lawrence Agcaoili (The Philippine Star) - November 28, 2020 - 12:00am

MANILA, Philippines — Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), said the local currency rallied for six straight days and finished at its strongest level in more than four years, or since closing at 47.99 to $1 in Sept. 23, 2016.

The peso opened weaker at its intraday low of 48.13 from Thursday’s close of 48.115 before gaining to hit an intraday high of 48.055. Volume jumped by 36 percent to $783.4 million from $575.71 million last Thursday.

Ricafort cited the balance of payment (BOP) surplus as well as robust foreign portfolio investments reported by the Bangko Sentral ng Pilipinas (BSP).

The country’s BOP surplus surged 79.9 percent to $10.31 billion from January to October this year compared to $5.73 billion in the same period last year on the back of strong foreign exchange inflows as well as smaller trade deficit due to the impact of the COVID-19 pandemic on global trade.

This already surpassed the $7.84-billion BOP surplus booked in 2019 and the $8.1-billion target set by the BSP for 2020.

For the month of October alone, the Philippines logged a BOP surplus of $3.44 billion, more than 21 times the $163 million surplus recorded in the same month last year.  This was also the biggest surplus since the $3.96 billion recorded in November 2010.

The country also registered a net inflow in foreign portfolio investments amounting to $439.46 million in October or 4.2 times the $104.53 million booked in the same month last year.

Despite the inflow that ended seven consecutive months of net outflows, the country posted a net outflow of hot money amounting to $3.94 billion from January to October or three times the $1.22 billion recorded in the same period last year.

Ricafort said the BOP surplus and net inflow of hot money beefed up the country’s gross international reserves (GIR), providing greater buffer for the peso.

Ricafort said the peso continues to strengthen as December draws nearer, when there is a seasonal increase in OFW remittances and conversion to pesos for Christmas spending.

For his part, BSP Governor Benjamin Diokno said the peso has remained stable and has been one of the strongest currencies in the region, gaining about five percent from 50.635 in end-2019 amid the COVID-19 pandemic.

“The strength of the Philippine peso is reflective of our sound macroeconomic fundamentals, which was achieved through years of resolute structural and economic reforms,” Diokno said.

RCBC
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