The Philippine peso hits a nearly three-year high as establishments in the country gradually open for business.
Closing at an intraday high of P49.80 on Friday, June 5, it was PHP’s strongest performance since June 2017 at 49.63.
The Philippine currency gains strength alongside the increasing confidence and optimism on both domestic and global economic recovery efforts.
According to the Bankers’ Association of the Philippines, the peso closed at flat 50 on Thursday. It opened Friday’s session at P49.93 with an intraday low posted at P50.05.
Meanwhile, the peso gained 81 centavos week-on-week, after finishing on May 29 at P50.61 per dollar.
The Friday session ended with a 1.01 billion dollar volume, higher than its Thursday level of $602.2 million.
The stronger peso reflects the improving risk sentiment for emerging market currencies alongside the reopening of more economies.
A stable outlook
Michael L. Ricafort, Chief Economist of Rizal Commercial Banking Corporation, said that the improved global market risk appetite led to gains in emerging markets like the Philippines.
He added that the slight easing of the inflation rate to 2.1 percent in May 2020, the slowest in six months, from 2.2 percent in April 2020 contributed to the latest appreciation in the peso exchange rate.
Furthermore, the strong vote of confidence by international investors on the country’s relatively more robust economic and credit fundamentals in recent years also strengthened the local currency.
Debt watcher S&P Global Ratings recently affirmed the country’s BBB+ credit rating and its stable outlook, at two notches above the minimum investment grade, while some countries received a downgrade.
A stronger peso will lead to lower prices of oil and other goods.
More local businesses are reopening after the country transitioned to a relaxed form of community quarantine on June 1.
Meanwhile, the country’s unemployment rate soars its highest since 1998 at 17.7 percent. At least 7.3 million Filipino losing their jobs due to the COVID-19 lockdown. However, the Department of Labor and Employment is hopeful that the labor market will recover as the economy gradually reopens.