Peso hits four-year high on S&P’s PHL rating upgrade

The peso rose to a new four-year high on Thursday as the market reacted positively to news that the Philippines got a higher credit rating from Standard & Poor’s. 

 

The local currency finished the trading day at 41.68 against the US dollar, appreciating by 15 centavos from Wednesday’s close of 41.83:$1. 

 

During intraday trade, the highest value reached against the greenback was 41.60, while the lowest was 41.73. 

 

The peso’s close on Thursday was the highest in over four years. The last time the exchange rate reached at least as strong as 41.68 against the US dollar was on March 24, 2008, when the local currency closed the same as today’s rate. 

 

The Bangko Sentral ng Pilipinas said there is reason to believe the peso may remain strong throughout the year given the favorable developments in the economic front that continues to boost the appetites of fund owners for peso-denominated stocks and bonds. 

 

Increased purchases of publicly traded stocks pushed the Philippine Stock Exchange Index today to a close of 5369.98, up by 15.26 points from that recorded on Wednesday. 

 

“The economy is fundamentally strong and is expected to stay that way. More [investor] confidence, more foreign exchange flows, stronger peso,” BSP Deputy Governor Diwa Guinigundo said.

 

The Philippine economy, measured in terms of gross domestic product, expanded by 6.4 percent in the first quarter from a year ago. This was the second-fastest pace of growth in the first quarter in Asia following the 8.1 percent for China.  

 

The appreciation of the peso on Thursday came following the release of a report Wednesday night that Standard & Poor’s raised the Philippines’ credit rating from BB to BB+, or from two notches to one notch below investment grade. 

 

S&P cited the Philippine government’s declining debt burden—its outstanding debt as a percentage of the country’s GDP and rising foreign exchange reserves. — DVM, GMA News