The peso climbed to a 45-month high against the US dollar on Monday, buoyed by investors’ lack of appetite for the greenback and the bleak outlook for imports amid the COVID-19 pandemic.
The local currency closed at 48.71, up from 48.765 per dollar on Friday. It was its strongest finish in 45 months since it settled at 48.66 a dollar on Nov. 10, 2016. Total volume turnover reached $423.3 million.
“The strength of the peso is driven by the continued lack of demand for the US dollar,” Astro del Castillo, managing director of First Grade Finance Inc., a finance and investment company, told Manila Standard.
“In fact, the peso is not the only currency in the Asian region that continues to exhibit strength against the greenback,” he said.
He said that despite the current trend, the peso was not expected to cross the 47-per-dollar boundary. Del Castillo predicted that it would hover between 48.60 and 48.80 a dollar in the coming days.
“But of course it will depend on the factors affecting the weakness of the US dollar,” del Castillo said.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno earlier said the peso was the most appreciated currency in Asia right now and was even stronger than the Japanese yen and Taiwan dollar.
He said this was due to the significant inflows of dollars in the country and the robust gross international reserves which hit an all-time high of $98 billion as of end-July 2020.
“We got high ratings from global credit watchers Fitch Ratings, S&P Global Ratings and Moody’s Investors Service. So there is high confidence on the peso,” Diokno said.
Diokno said that in the past crises, the country’s dollar reserves dwindled, resulting in the depreciation of the peso. He said that because of the sound macroeconomic fundamentals, the country’s reserves reached a record high and the peso appreciated despite the onslaught of the COVID-19 pandemic.
