The peso remains one of the most stable currencies in Asia as the coronavirus pandemic continues to wreak havoc in the global economy, the Department of Finance (DOF) said yesterday.
In the DOF Economic Bulletin, Finance Undersecretary Gil S. Beltran, said the Philippine peso ranked first among the four currencies in Asia that maintained their value against the US dollar since the start of the year.
As of July 8, the peso appreciated by 2.21 percent against the greenback, higher than the Hong Kong dollar, Taiwan dollar and Japanese yen, which appreciated by 2.07 percent, 1.68 percent and 0.87 percent, respectively.
“Despite the rising risks in the global economy, heightened by the spread of COVID-19, the collapse of global markets, the extreme volatility in currencies and the downgrading of credit ratings of many economies, the Philippine peso remained firm,” Beltran said.
The peso-dollar exchange rate also remained stable in 2020, Beltran said, noting the local currency’s coefficient of variation at 0.73 percent, ranking third among 12 regional currencies and lower than the 1.86 percent Asian average.
“The main reasons for the peso’s growing strength and stability are the country’s strong balance-of-payments (BOP) position and rising Gross International Reserves (GIR),” Beltran said in his report to Finance Secretary Carlos G. Dominguez III.
The country generated a BOP surplus of $3.688B in the first five months of the year, helped by slower imports and outward payments amid shrinking foreign demand.
The GIR, meanwhile, rose to $93.3 billion at end-May, up 9.3 percent from $85.4 billion in the previous year. As a
percentage of imports of goods and services, it rose to 8.4 months from 7.4 months in May last year.
Belttan said higher GIR in turn boosted the confidence in the Philippine peso.
“Despite the pandemic and global economic contraction, strong macroeconomic fundamentals support the country’s favorable financial footing. The BOP surplus in 2019 was the highest in recent history and continued through May of 2020,” Beltran said.
“Manageable budget deficits and prompt adjustment of monetary settings in response to current developments help maintain investor confidence,” he added.