The peso rebounded to 56.82 against the US dollar on Friday, which an economist said was a “healthy correction” from a record low of 57.18 Thursday.
Data from the Bankers Association of the Philippines showed the local currency gained P0.36 to close at a five-day high on a volume turnover of $1.15 billion.
Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said the peso “sharply gained versus the US dollar” which was “considered a healthy correction.”
“The peso also strengthened as global crude oil prices lingered among the lowest levels in seven to eight months recently, thereby could also help reduce the country’s oil imports,” he said.
Ricafort said prices of other global commodities such as wheat also moderated Friday.
Bangko Sentral ng Pilipinas Governor Felipe Medalla said last week that the recent peso weakness was due mainly to a “stronger dollar.”
Hawkish signals from the US Federal Reserve pushed demand for the US dollar.
The Bangko Sentral ng Pilipinas followed the move of the Fed by raising the overnight borrowing rate by 175 basis points this week to 3.75 percent in a bid to temper inflation and the peso depreciation.
The BSP kept the policy rate at a record low of 2 percent in 2020 and 2021 to support the economy’s recovery from the COVID-19 pandemic.
Ricafort predicted that the peso would recover against the US dollar in the fourth quarter, backed by seasonal higher inflows from remittances and export sales.
The inter-agency Development Budget Coordination Committee originally expected the peso-dollar exchange rate this year to settle between P51 and P53.
It also expects the peso to trade between P51 and P55 against the US dollar from 2003 to 2008. The peso closed 2021 at 50.99 against the dollar, weaker than 48.023 on the last trading day of 2020.
