MANILA, Philippines – The Philippine peso returned to the P53 level on Thursday, February 2, its strongest in over seven months.

The peso closed at P53.845 against the greenback, its best since June 17, 2022, when it ended the trading day at P53.75.

The peso’s strength comes as the United States Federal Reserve delivered an anticipated 25-basis-point interest rate hike on Wednesday, February 1, indicating that it has slowed down its monetary policy tightening. The Fed is expected to deliver two more similar rate hikes in 2023.

Rizal Commercial Banking Corporation chief economist Michael Ricafort said a stronger peso would help ease inflationary pressures, especially as the Philippines is mostly import-dependent.

Inflation in 2022 averaged at 5.8% and hit a 14-year high of 8.1% in December. For January 2023, the Bangko Sentral ng Pilipinas estimated that inflation could be between 7.5% and 8.3%.

Ricafort added that the local currency appreciation was also partly supported by gains in the local stock and bond markets.

“The peso exchange rate generally appreciated against the US currency in recent days/weeks as global crude oil hovered among three-week lows…erasing all of the increases in global oil prices since [the Ukraine-Russia war],” he said. – Rappler.com