Peso rallies to 8-month high

Breaks

The Philippine peso has rallied for a seventh consecutive day, breaking through the 146:$1 on Thursday to reach an eight-month high of 145.89 against the US dollar. The foreign exchange dealing system said the market trading had a higher volume of $997.56 million versus the previous day’s $657.50 million. The weighted average for the peso was 145.91 (Philippine Dealing System) from Wednesday’s 146.06.

Foreign exchange traders anticipated the continued peso rally. The opening low of 145.86 was already an eight-month high.

Metrobank traders expected the peso to trade within a range of 145.80 to 146.10. They had a week range outlook of 145.80 to 146.80.

The peso has been rallying for a week amid encouraging assurances from the incoming government of President-elect Rodrigo Duterte whose economic team has been proclaiming continued growth. There were also assurances that the next administration would continue the Aquino government’s growthinducing policies.

According to Bloomberg news, the currency’s seven-day rally is “the longest since January, 2015” and that it was “aided by $433 million of inflows into local shares since Duterte swept the May 9 elections.”

The peso rose 0.3 percent to 145.885 per dollar at the midday break based on prices from the Bankers Association of the Philippines.

Bloomberg said the currency’s 2.6 percent gain in a month is the best in Asia. Sentiment toward emerging-market assets has also been bolstered by indications the Federal Reserve will refrain from raising interest rates at its June 14-15 meeting and that any policy tightening will be gradual.

“From the local perspective the fundamentals are strong, so that’s one of the reasons we go with Asian currencies,” said Joey Cuyegkeng, a Manila-based economist at ING Groep NV. “The main factor at the moment is the external developments including next week’s US central bank policy meeting,” he said, adding that ING will probably revise its year-end forecast of 147.60 per dollar to reflect a stronger peso.

The Philippine economy grew 6.9 percent in the first quarter, while inflation remained subdued at 1.6 percent in May, latest data showed. The country’s foreign-exchange reserves were $83.5 billion at then end of May, near a record-high, according to central bank data released on Monday. (With Bloomberg)