The Philippine peso closed stronger against the US dollar for the 4th straight day on Monday, November 9, the strongest in over 4 years, as Democrat Joe Biden emerged victorious in the US presidential race.
The peso gained 0.2% to P48.145, the strongest since October 20, 2016, when it closed at P48.10 against the greenback.
Biden’s victory is “seen as generally favorable to Asia…with the expected easing of the US-China trade war,” said Michael Ricafort, Rizal Commercial Banking Corporation chief economist.
Ricafort also said developments that led to the local currency’s appreciation include the rally of stock markets overseas, major global currencies reaching two-month lows, and less demand for the US dollar.
Ricafort noted that there was less demand for the US currency as a safe haven, “amid improved global market risk appetite especially in emerging markets such as the Philippines.”
But the peso’s strength is also supported by a weak economy, as seen in the latest trade figures. With low imports, there is little demand for dollars.
Meanwhile, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the country’s hefty gross international reserves as well as the “confidence of international financial institutions and credit rating agencies” in the Philippine economy supported the peso.
The peso was also stronger a day ahead of the Philippines’ 3rd quarter gross domestic product (GDP) data announcement on Tuesday, November 10. The country’s GDP is widely expected to improve from the revised record contraction of 16.9% in the 2nd quarter.
The peso’s strength, however, is a disadvantage for households relying on dollar remittances from abroad. – Rappler.com