Peso escapes ‘worst performing currency’ tag
The peso was no longer the worst performing currency in the region in 2017 after a strong rally towards the end of last year due to strong inflows particularly from Filipinos working and residing abroad.
“The peso finished strongly in 2017 with a slight 0.5 percent depreciation and moved within a tighter band compared to other Asian currencies. This is due to sustained strong macroeconomic fundamentals backed by prudent fiscal and monetary policy and continuing economic reforms,” Finance Undersecretary Gil Beltran said.
The peso was once tagged as the worst performing currency in the region after depreciating by more than four percent to hit an 11-year low of 51.77 to $1 on Oct. 25, 2017.
It rallied towards the end of last year and is now trading at its strongest level in six months or within the 49 to $1 level due to strong inflows from remittances as well as investments.
Beltran attributed the strengthening of the peso against the dollar to the enactment of the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the foreign exchange liberalization measures adopted by the Bangko Sentral ng Pilipinas (BSP) and the series of rate hikes adopted by the US Federal Reserve.
“Sustaining the country’s good macroeconomic fundamentals is essential to maintaining stable currency markets. Likewise, reform programs such as forex liberalization create an environment more beneficial to economic growth,” he said.
The Korean won booked the biggest appreciation with a gain of 11.48 percent against the dollar followed by the Malaysian ringgit with 9.8 percent, Thai baht with 9.1 percent, the Taiwanese dollar with 8.02 percent, the Singaporean dollar with 7.66 percent, Indian rupee with 5.97 percent, Japanese yen with 3.65 percent, and Vietnamese dong with 0.28 percent.
In terms of volatility, Beltran said the most stable currencies are the Vietnamese dong with a 0.29 percent volatility rate followed by the Hong Kong dollar, 0.3 percent; Indonesian rupiah, 0.44 percent and the peso at 0.9 percent.
The most volatile currencies are the Indian rupee and Malaysian ringgit at 2.33 percent followed by the Korean won at 2.31 percent, and Thai baht at 2.3 percent.
“Volatility measures indicate that the peso was among the four Asian currencies which moved within the tightest range,” Beltran said.