Closes at P41.72 vs dollar
MANILA, Philippines (Xinhua) – The peso rose to a four-year high on Tuesday, closing at P41.72 against the dollar, on continued fiscal consolidation in the fiscal front and high liquidity in the external sector, analysts said.
Central Bank Governor Amando M. Tetangco Jr. said the stronger peso reflects the country’s buoyant economy.
“The appreciation has reflected the positive development in the economy particularly the improved fiscal position as well as the continuing external liquidity of the economy plus of course the robust GDP growth that we experienced in the first quarter,” Tetangco said in an interview with reporters.
But he added the monetary authorities would not want a volatile currency that makes the conduct of trade with the rest of the world much harder for the country’s export sector.
A stronger peso makes for more expensive commodities and goods coming out of the Philippines, rendering exports much less competitive as a result.
He gave assurance the peso was moving in tandem with the movement of currencies in the region, making the peso broadly competitive still.
“We are moving in line with other currencies in the region. I think now the peso is probably ahead in terms of value vis a vis the other currencies but that’s how the market perceives the currencies and we are just allowing the market to determine the rate,” Tetangco said.
Data from the Central Bank showed the peso had appreciated against the dollar by 4.33 percent from year-to-date, far more than the New Zealand dollar which appreciated by 4.18 percent or the Singaporean dollar which strengthened by 2.70 percent.
Some of the region’s currencies that lost value include the Indonesian rupiah (2.82 percent) and Indian rupee (4.34 percent).
The peso’s volatility, pertaining to rapid swings in value, was the lowest among peers in the region at only 1.14 percent versus 1. 72 percent for the Indonesian rupiah, 1.38 percent for the Thai baht, 1.93 percent for the Malaysian ringgit, 1.20 percent for the Singaporean dollar, 3.10 percent for the New Zealand dollar, 2.93 percent for the Australian dollar, 2.53 percent for Japanese yen.
Traders said the peso looks to strengthen some more in the coming weeks in the wake of the positive results of a summit among European Union members committed to providing capital directly to their ailing banks through the European Stability Mechanism.