Peso continues to rally, closes at 4-1/2 year high

The peso rallied for the seventh straight trading day, gaining another 12.5 centavos yesterday to hit its highest level in almost five years.

The local currency closed at an intraday-high of 47.855 to $1 after piercing the 47 level on Thursday, as the Philippines incurred a smaller trade deficit on the back of higher exports.

This is the strongest level for the peso since closing at 47.83 to $1 last Sept. 22, 2016.

The peso opened stronger at 47.92 before hitting an intraday low of 47.945. Trading volume inched up slightly to $985.37 million from $978.05 million last Thursday.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the record-high exports volume that resulted in a narrower trade deficit fundamentally supported the stronger peso.

He said the local currency also appreciated after the softer manufacturing data that could remain sluggish amid the lockdown measures in the National Capital Region and adjacent provinces (NCR Plus) since the latter part of March, thereby significantly reducing economic activities and slowing the recovery in imports and demand for dollars to pay for imports.

Another factor, he said, was the arrival of 1.5 million more Sinovac COVID-19 vaccine doses in the country, the highest single delivery so far, amid the increase in the expected COVID-19 vaccine doses for May to seven million from four million.

The RCBC economist said the peso continued to appreciate as the number of new COVID-19 cases locally recently lingered among one-month lows recently.

Ricafort said upcoming fundraising activities by the government and some of the country’s largest companies could entice foreign investors, thereby resulting in more inflows of US dollars/foreign currency that add to the country’s balance of payments and gross international reserves.

Ricafort said the next important support is 47.7 to 47.8 per $1.