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Philippines: Peso gains strength vs dollar
THE Philippine peso recorded its best day in a month after returning to the P49 to a US dollar territory on Thursday.
The local currency rose 31 centavos from the previous day’s close of P50.27 to $49.96:$1. It has not been this high since November 12, when it closed at P49.85 per dollar.
The peso’s sharp gain, according to Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort, is largely due to a seasonal surge in overseas Filipino workers (OFW) remittances and conversion to pesos, a spending spree by consumers and OFW families, and to finance payrolls and other expenditures of businesses and other institutions with US dollar income sources.
“The peso gained also after the hefty gains in the local stock market, almost erasing yesterday’s declines as the country’s detection of the first Omicron variant cases already expected as a matter of time, as already being present in more than 70 countries worldwide,” he added.
The local currency is also stronger, Ricafort also said, following the widely predicted decision by the Bangko Sentral ng Pilipinas to maintain its policy rates despite more aggressive United States Federal Reserve monetary tightening signals.
He also said that the peso has strengthened as a result of the Senate’s ratification of a legislative reform bill that would allow complete foreign ownership of telecoms, air carriers, domestic shipping, rail, and irrigation, resulting in higher foreign direct investments into the country.
The peso is also stronger following the timely approval of the 2022 national budget, which is now awaiting President Rodrigo Duterte‘s signature as a major pillar for the country’s economic recovery program, according to the RCBC economist. He further said the 2022 national budget is a major pillar for the country’s economic recovery program, allowing for increased government spending, particularly on infrastructure and healthcare, including vaccines and booster doses against Covid-19.
“Relatively low new Covid local cases at among new 1.5-year lows or since May 2020 recently amid record vaccine arrivals of more than 10 million yesterday on a daily basis in time for next national vaccination program towards population protection also led to the latest gains in the peso,” Ricafort concluded.
Source: https://www.manilatimes.net/2021/12/17/business/top-business/peso-gains-strength-vs-dollar/1826205