The peso emerged as the second strongest gainer among Southeast Asian currencies in the first seven months despite external challenges such as the trade war between the US and China.
Finance Undersecretary Gil Beltran said the peso ranked second among the top currencies in the region on the back of the country’s strong balance of payments position and higher gross international reserves.
“Year-to-date, the peso appreciated by 2.82 percent, ranking next to Thailand [baht] which appreciated by 4.27 percent,” Beltran said in an economic bulletin.
He said the peso-dollar exchange rate also remained stable throughout the period, and its coefficient of variation at 0.82 percent ranked sixth among 12 regional currencies and lower than the 0.93 percent Asian average.
The peso closed at 51.79 against the greenback Monday, tracking the regional weakness.
Nicholas Antonio Mapa, the senior economist at ING Bank Manila, said the peso, along with other emerging market currencies, traded weaker on Monday “given the heightened concerns about the trade war escalation with China firing back this morning.”
Beltran said the peso was still a gainer this year as “strong foreign exchange inflows from exports of services, remittances, income from investments abroad, direct foreign investments and foreign borrowing all contributed to the strong BOP position [and] boosted the confidence in the Philippine peso.”
Beltran said that the exchange rate adjusted for the GDP price deflator was significantly correlated to the size of the BOP surplus relative to GDP and the size of the GIR relative to imports of goods and services.
The BoP surplus reached $4.79 billion as of end-June, representing 3 percent of GDP, and the highest since 2012. This was a reversal from the $3.26-billion BOP deficit incurred in the same period in 2018.
Meanwhile, GIR climbed to $85.77 billion as of end-June, or 10.4 percent higher than last year and equivalent to 7.5 months of imports of goods and services. The GIR level was also 5.1 times the country’s short-term external debt.