Manila: The peso hit Php52.92 on Wednesday (June 8) against the US dollar on Tuesday, as its 42-month slide continues.
This results in higher local value of remittances sent home by overseas Filipino workers.
The US dollar gained ground against the Philippine peso last week, breaking the Php52.50 support level, breaking past Php52.87 on Friday (June 3). As a result, the USD vs Php closed at its highest since March 2019, surpassing the August 2019 peak.
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A technical analysis released by dailyfx.com stated they were "slightly bullish” in their Hptechnical outlook.
“Prices are now sitting at the ceiling of a brewing ‘rising wedge’ that has its beginnings a year ago. This resistance can hold, sending the pair back towards the ascending floor of the chart pattern,” the guidance stated.
Analysts said, however, the Php53 vs $1 could be still be breached — as it’s entirely possible the US currency could hit a higher “breakout”. This would then “open the door to uptrend resumption, exposing the 78.6% Fibonacci extension at 53.3079,” the site’s analysts stated.
Given the downward trend, as well as the negative risk sentiment and accelerating global inflation, overseas Filipinos could enjoy higher rates when they remit dollars to loved ones.
With the Philippine economy showing signs of continued strength, analysts say the peso could still see further drops.
For four months in a row till April, the Philippine manufacturing sector has expanded.
Job hirings, too, have spiked, as factories saw increases in their workforce for the first time since February 2020.
Moreover, analysts cite another pressure point for the Asian currency: higher Philippine Treasury yields, which gives the US dollar a boost.
The Wednesday peso-dollar level, as tracked by the Philippines central bank, came tracing its three-and-half year decline, which broke a key level of support of around 52.50 vs $1, which it had held since the middle of March 2019.
Meanwhile, the Philippine stock market closed slightly higher on Wednesday— up 15.61 points or 0.23%.
The all-shares board was up 6.33 points, or 0.18%, with Banks and Financial sector leading gainers (up 13.66 points, or 0.85%), followed by the Industrial sector and Holding Firms.
Three sectors — Mining and Oil, Property and Services — saw slight drops in value.