Peso rallies to again carve fresh three-year high

The Philippine peso appreciated to the P48:$1 level on Tuesday, again carving its best showing in over three years.

The local currency gained 9 centavos to close at P48.92:$1 versus Monday's finish of P49.01:$1. This is the best reading of the local currency since it closed at P48.66:$1 on November 10, 2016.

According to Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort, Tuesday's appreciation came amid hints that the metropolis could ease lockdown restrictions later this month.

"The peso exchange rate closed stronger... amid some signals from Malacanang that the MECQ may be eased to GCQ after August 18, 2020," he said in a mobile message.

Metro Manila, Bulacan, and the Calabarzon areas were again placed under the modified enhanced community quarantine (MECQ) starting August 4.

Presidential spokesperson Harry Roque, Jr. earlier on Monday said that the extension is possible, but highly unlikely.

"Peso has been stronger on slower economic recovery prospects amid the two-week recovery prospects amid the two-week MECQ that could further slow down demand/recovery in imports, which, in turn, reduces the demand for US dollars to pay for imports," he said.

"Stronger peso reduces importation costs/prices that could help ease inflation and help sustain the low interest rate environment," he added.

Ricafort also noted that the greenback continued to soften given reduced demand for safe-haven assets.

"The US dollar remained relatively weaker vs. major global currencies amid improved global market risk appetite that reduced demand for the US currency as a safe haven amid gains in the US stock markets to new 5.5-month highs," he said.

Moving forward, Ricafort said the market is awaiting the release of the latest gross international reserve (GIR) figures.

"Markets are also anticipating the latest GIR data that could post new record highs amid increase in foreign borrowings by the government and the biggest companies," he said. —LDF, GMA News