Peso bouncing back to Php55 vs $1 level? What’s behind peso rally

Manila: The peso has appreciate this week, bouncing back to the 55-level, after lingering for months within a higher range.

The local currency closed at 55.95 vs the greenback on Wednesday from the previous day’s 56.20 finish. The exchange rate between the currency pairs ranged from 55.95 to 56.12, with the average level stood at 56.03 to a dollar. It stood at Php 56.45 on February 1, central bank data showed.

Wednesday’s forex trade volume slightly increased to $.29 billion from $1.26 billion on Tuesday.

The Philippine peso has been gaining ground, appreciating 1.5 per cent against the greenback, from Php56.880 on October 3, 2023, to Php55.941 on February 5, 2024.

At this level, however, the peso remains weaker than where it stood on this same day last year (February 7, 2023), at Php54.279 vs the US$.

After weakening to further Php56.908 on September 22, 2023, the peso has started gaining ground, hitting Php55.808 on November 16, 2023, thanks to a spike in pre-holiday dollar remittances and higher consumer spending.

Both currency traders and the nation's economic managers foresee the Philippine peso advancing, buoyed by a number of factors. Despite prior hurdles, the peso has found allied in the latest inflation and jobs data, and anticipated to potentially strengthen further, marking a projected increase from its current value.

Meanwhile, the local shares market strengthened on Wednesday’s trading as the government reported that the unemployment rate further eased to 3.1 percent in December 2023.

Analysts said the shares market’s Wednesday close is one of the new highs in nearly a year or since February 13, 2023 on a closing basis.

Shares are being propped up by the best employment data in nearly two decades or since revised records started in 2005.

It also comes a day after the latest easing in the Philippine headline inflation data to 2.8 percent year-on-year, indicating that the country’s central monetary authority would have a leeway to keep rates stable – and even giving room for a rate cut.

The PSEi “All Shares” index also improved by 27.71 points to 3,566.76 level.

Except for Mining and Oil, which finished lower by 54.83 points to 9,088.89, all counters closed with gains, on net market value turnover ofPhp6.13 billion. There were 112 gainers against 80 losers, while 49 issues were unchanged.