Peso extends streak to mark another three-year high

The Philippine peso extended its winning streak against the US dollar on Tuesday, to eke out another three-year high.

The local currency gained 0.5 centavos to close Tuesday at P48.48:$1, stronger than last Friday's finish of P48.485:$1.

This is now the strongest showing of the peso since it closed at P48.34:$1 on November 3, 2016.

"The peso closed marginally stronger vs. the US dollar... amid renewed weakness of the US dollar vs. major global currencies to new two-year lows," Michael Ricafort, chief economist at the Rizal Commercial Banking Corp. (RCBC), said in a mobile message.

This comes as US interest rates and bond yields have neared record lows, and the downward correction in the prices of US government bonds and treasuries.

This follows the decision of the Fed to allow higher inflation and employment, effectively reducing the attractiveness of the greenback.

"Weaker Philippine manufacturing data would eventually slow down imports and the demand for US dollars to pay for imports," said Ricafort.

According to survey results of the IHS Markit on Tuesday, the Philippines Purchasing Managers' Index (PMI) fell to 47.3 in August, the weakest in three months.

The PMI is a composite indicator of the manufacturing sector’s performance, with 50.0 as the threshold. A reading above 50 indicates growth, while below 50 is a contraction.

"Peso also stronger after GCQ maintained in Metro manila and some nearby areas and MGCQ in other around the country for the month of September 2020," said Ricafort. — RSJ, GMA News