Philippine peso 2nd strongest currency in SEA, DOF reports

The Philippine peso was the second-strongest currency against the US dollar among its peers in Southeast Asia, next to the Thailand baht as of July 2019, the Department of Finance (DOF) said on Monday.

“As of July 2019, the Philippine peso ranked second among the top currencies in Southeast Asia gaining strength against the US dollar,” the DOF said in its Economic Bulletin.

The Philippine peso closed at P50.89:$1 at the end of July , its best showing in nearly 18 months since closing at P50.84:$1 on January 26, 2018.

It appreciated by 2.82% against the dollar in January to July, following the Thailand baht which strengthened by 4.27%.

“Our relatively strong macroeconomic fundamentals and lesser engagement in global value chains make the Philippine peso less vulnerable to wild currency fluctuations,” Cid Terosa, dean of the School of Economics at the University of Asia and the Pacific (UA&P), told GMA News Online.

According to the DOF, the peso was among the most stable currencies in the region during the period, ranking 6th among 12 currencies.

“The main reasons for the peso’s growing strength and stability are the country’s strong balance-of-payments (BOP) position and rising Gross International Reserves (GIR),” the DOF said.

“Strong foreign exchange inflows from exports of services, remittances, income from investments abroad, direct foreign investments and foreign borrowing all contributed to the strong BOP position. These, in turn, boosted the confidence in the Philippine peso,” it added.

However, the ongoing tensions between China and the United States could weaken the Philippine peso in the short term.

“The trade war between US and China, plus changes in the policy stance of the USA, point to a weaker peso in the short-term. This could be good for exports, though,” said Terosa.

The Bangko Sentral ng Pilipinas (BSP) noted in June that the country remains largely unaffected by the US-China trade tensions.

The ASEAN+3 Macroeconomic Research Office (AMRO) also said the Philippines is among the countries least affected by the US-China trade war. —VDS, GMA News