MANILA: The Philippine peso rose to its strongest level in almost two years against the dollar, buoyed by weakness in the US currency and oil prices.
The peso gained 0.2% to around 55.17 per dollar on Monday (May 26), the highest since August 2023, as the greenback is weighed down by growing concerns over the US fiscal gap. Low crude oil prices are also benefiting the Philippines, a net fuel importer, and could help narrow its balance-of-payments deficit.
"The impressive rally in the peso has been all dollar driven, and is increasingly deviating from domestic fundamentals,” said Wee Khoon Chong, senior Asia Pacific market strategist at BNY.
"Key resistance level for the USD/PHP would be 55.41, while the major support level would be the 55.0 round figure.”
The country’s central bank signaled earlier this month that authorities are unlikely to intervene to curb the peso’s appreciation. Investors also received some news of policy continuity on May 23 as President Ferdinand Marcos Jr. retained his economic managers, including Finance Secretary Ralph Recto, amid a Cabinet shakeup.
Emerging Asia’s trade-dependent currencies such as the ringgit and Taiwan dollar led most regional peers stronger versus the dollar on Monday, driven by bullish trade sentiment after President Donald Trump announced Sunday that he would extend the deadline for the European Union to face 50% tariffs until July 9.
Nonetheless, growth concerns remained a headwind for the peso, as the nation’s 5.4% economic growth in the first quarter undershot economists’ estimates. Other worries included renewed speculation of more aggressive rate cuts with potential reserve requirement ratio reductions as well as a deterioration of the current account, BNY’s Chong added. - Bloomberg
