Peso maintains strength, closes 2020 at P48:$1 level

The Philippine peso maintained its strength against the US dollar throughout 2020, following the weakened trade amid the coronavirus disease 2019 (COVID-19) pandemic.

The local currency closed Tuesday, December 29 -- the last trading day of the year -- at P48.023:$1, 2.3 centavos stronger than Monday's finish of P48.055:$1.

Year-to-date, the peso has appreciated by P2.612 or 5.15% from P50.635:$1 on December 27, 2019, the last trading day of the previous year.

"This year the peso strengthened as the pandemic weakened all forms of transactions with the rest of the world," Cid Terosa, senior economist at the University of Asia and the Pacific (UA&P), said in a mobile message.

"In particular, listless economic activity meant sluggish demand for imports and consequently, slow outflow of foreign exchange," he elaborated.

Latest data available from the Philippine Statistics Authority (PSA) indicates that imports fell by 19.5% year-on-year in October to $7.973 billion from $9.414 billion the same month last year, while exports fell 2.2% to $6.202 billion from $6.341 billion.

Meanwhile, the balance of payments—a measure of Philippine transactions with the rest of the world—fell to a $1.473-billion surplus in November from $3.435 billion in October. A surplus means more funds entered the country, while a deficit means more funds went out.

"The surge in remittances, which boldly reflected the desire of OFWs to bring cheer and joy to their families amidst the pandemic, also contributed to a stronger peso," said Terosa.

Data released by the Bangko Sentral ng Pilipinas (BSP) shows that remittances continued to climb in October to post a three-month high, but still not enough to offset year-to-date losses.

Central bank data showed that cash remittances—money transfers coursed through banks—rose 2.9% to $2.747 billion in October from $2.671 billion the same month last year, and from $2.601 billion in September.

Meanwhile, personal remittances—the sum of transfers sent in cash or in-kind via informal channels—grew 2.5% to $3.044 billion from $2.969 billion last year, and $2.888 billion in September.

"If the pandemic will be contained next year and economic activities will be resuscitated, I see the peso-dollar rate rising close to P50-P51:$1," Terosa said when asked for his outlook for 2021. — BM, GMA News