The peso on Wednesday climbed to a more than five-month high against the US dollar amid the seasonally high inflows of remittances and as the greenback weakened against major global currencies.
The peso gained 14 centavos to close at 55.1 from 55.24 Tuesday. It was the local currency’s strongest level since finishing at 55.08 at the close of trading day on July 4, 2022. Total volume turnover reached $833.7 million Wednesday, down from $940.55 million previously.
Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said the month of December is among the peak season for OFW remittances. “The conversion to pesos to finance increased holiday spending [compared to one to two years ago], especially a few more days before Christmas and New Year holidays, [was] the main reason why the peso has been relatively stronger versus the US currency recently,” he said.
Ricafort said the US dollar weakened against major global currencies to new 5.5-month lows, especially the strong appreciation of the Japanese yen against the greenback to the strongest in more than four months.
“The US dollar has significantly corrected lower vs. global currencies since Nov. 10, 2022 when U.S. CPI/inflation started to ease better than market expectations, after hefty gains earlier in 2022 amid more aggressive Fed rate hikes that increased the attractiveness of the US dollar with higher interest rate returns,” Ricafort said.