Peso strengthens to P56:$1 leve

Peso strengthens to P56:$1 level

The Philippine peso appreciated for the fifth straight trading day back to the P56:$1 level on Tuesday to mark its best showing in nearly four months, given the reduced chances of a policy rate cut later this week.

The local currency shed 35.6 centavos to close at P56.96:$1 versus Monday’s finish of P57.316:$1. This is the best performance of the peso since April 15, 2024’s P56.808:$1.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort attributed Tuesday’s appreciation to recent remarks by Bangko Sentral ng Pilipinas (BSP) governor Eli Remolona Jr. who said a rate cut this month was “a little less likely.”

This comes after the Philippine Statistics Authority (PSA) reported the July inflation print at 4.4%, faster than the 3.7% in June, and the fastest in nine months since October 2023’s 4.9%.

The Monetary Board of the BSP is scheduled to meet on Thursday, August 15, 2024, to decide whether or not current conditions warrant a change in policy settings which are currently at 17-year highs.

“The peso still appreciated vs. the US dollar recently to somewhat catch up with the bigger appreciation in other ASEAN/Asian currencies over the past two to three weeks, amid the Japanese yen’s sharp appreciation vs. the US dollar recently,” Ricafort said in a mobile message.

Ricafort also noted the seasonal increase in remittances from overseas Filipinos and conversion for tuition and other school opening payments or expenditures as the school year started in July. Latest data showed that cash remittances stood at $2.583 billion in May, up from $2.562 billion in April.

“Going forward, the performance of the US dollar/peso exchange rate would be partly a function of intervention/defense as consistently seen over the past two years,” Ricafort said.