The peso pierced through the 48-per-dollar boundary on Tuesday, its strongest showing in 45 months, on continued weak imports amid the onslaught of the COVID-19 pandemic.
The local currency gained nine centavos to close at 48.92 Tuesday from 49.01 per greenback on Monday. It was its strongest level since settling at 48.66 a dollar on Nov. 10, 2016. Total volume reached $743.4 million Tuesday, up from $409.3 million Monday.
ING Bank Manila senior economist Nicholas Mapa said the peso continued to strengthen as the current account moved back into surplus despite a projected 10-percent to 15-percent drop in remittances.
"The current account moved back into positive territory as imports imploded, due in large part to the substantial drop off in economic activity and capital formation in particular," Mapa told Manila Standard via email.
"With economic momentum slowing considerably while the virus spreads, we may not foresee a quick return to pre-pandemic demand for imports. Thus, PHP may retain its appreciation bias with the current account remaining in surplus," he said.
Mapa said a return of dollar strength ahead of US retail sales data might force the currency pair to return to 49-a-dollar level by weekend.
"Near-term pressure for Philippine peso will remain on appreciation path. Only things that can break trend are large-scale BSP [Bangko Sentral ng Pilipinas] participation and resumption of import demand, with only government’s BBB [Build, Build, Build] as possibility," Mapa said.
Data from the Philippine Statistics Authority showed that imports fell 24.5 percent in June to $6.6 billion while exports dropped 13.3 percent to $5.3 billion.
Cash remittances declined by 16.2 percent in April to $2.046 billion from a year ago.
The Department of Finance said the peso remained one of the most stable Asian currencies despite the rising risks heightened by the onslaught of the COVID-19 pandemic.