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Manila Bulletin devider Business devider Banking & Finance devider Peso recovers sharply, closes at P57.97 on strong holiday remittances

Peso recovers sharply, closes at P57.97 on strong holiday remittances

Published Dec 26, 2024 09:03 am

The peso staged a robust recovery against the US dollar following the Christmas break, buoyed by a surge in overseas Filipino remittances and year-end trading activity.

According to data from the Bankers Association of the Philippines, the local currency closed at P57.97 on Thursday, Dec. 26, a significant appreciation from the P58.45 finish on Dec. 23.

Trading opened at P58.35, with the peso fluctuating from P57.97 to P58.35 throughout the day's session. Trading volume also increased significantly, reaching $1.758 billion compared to $1.180 billion recorded on the last trading day before Christmas.

"The US dollar/peso exchange rate again corrected lower for the 3rd straight trading day," Michael Ricafort, chief economist at Rizal Commercial Banking Corporation, said.  "This is considered a healthy correction after rising for five trading days."

He added that the closing rate of 57.97 is the lowest in nearly three weeks or since Dec. 6, 2024.
Ricafort noted that the peso's appreciation can be attributed to several factors, including the seasonal surge in remittances, as many Filipinos working abroad send money home during the holiday season, leading to an increased demand for pesos.

Positive sentiment in the local stock market also played a role, with the Philippine Stock Exchange index (PSEi) gaining for the third consecutive day, closing at 6,539.02, a one-week high.

Finally, signals from the Bangko Sentral ng Pilipinas (BSP) suggesting a potential rate cut in the first rate-setting meeting of 2025 and a more accommodative monetary policy stance also contributed to the peso's strength.
Despite the recent gains, Ricafort cautioned that the record high of 59.00 pesos per US dollar, reached on Dec. 19, 2024, has been respected for more than two years.

This suggests that there may be some resistance to further appreciation in the near term.

"Going forward, the performance of the US dollar/peso exchange rate would still be partly a function of intervention/defense as consistently seen for more than two years already," Ricafort said.

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