Metro Manila (CNN Philippines, December 16) — The Philippine peso posted its strongest performance in over a month on Thursday, finishing below ₱50 against the dollar.
The currency closed at ₱49.96 versus the greenback after ₱50.27 yesterday — marking its best outturn since the ₱49.85 on Nov. 12.
What led to this feat? Economists point to several factors, not the least of which is the propensity of Filipinos abroad to send more money home during this time of the year.
“[W]e should keep in mind that December may have stronger remittances coming from the balikbayans sending money home i.e., sending more USD and hence being converted to peso,” Regina Capital managing director Luis Limlingan told CNN Philippines.
Often considered a key source of disposable income, remittances allow households to ramp up spending in utilities and luxuries, especially during Christmas and New Year. Higher consumption, in turn, boosts economic activity.
The recent moves of both the Bangko Sentral ng Pilipinas and US Federal Reserve likewise strengthened the peso, analysts say.
“The peso is also stronger after the widely expected BSP decision to keep its policy rates/settings unchanged despite more aggressive Fed monetary tightening/normalization signals,” said RCBC chief economist Michael Ricafort in an email to CNN Philippines.
The BSP has kept interest rates at their current 2% low once again this December, despite the Fed hinting at multiple rate hikes this 2022 while holding back or tapering bond purchases faster than previously announced.
https://cnnphilippines.com/business/2021/12/16/BSP-policy-rate-December-16.html
Ricafort also attributed the peso’s appreciation to the Senate’s approval of the measure amending the Public Services Act, which allows foreigners to assume full ownership of public service companies in telecommunications and transportation.
The foreign exchange rate is expected to settle within ₱49-₱50 per dollar this year, based on the economic team’s latest macroeconomic assumptions.
