Peso extends winning streak, hits 6-month high

The Philippine peso appreciated for the fifth straight trading day on Wednesday to mark its strongest showing in over six months, following the release of strong economic data.

The local currency appreciated by 7 centavos to close at P54.80:$1 versus its previous finish of P54.87:$1. This is the strongest since the peso closed at P54.77:$1 on June 28, 2022.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort attributed Wednesday’s strength to the release of the foreign direct investments (FDIs) data from the Bangko Sentral ng Pilipinas (BSP).

Central bank data show that FDI net inflows stood at $923 million in October 2022, the highest in six months since the $1.024 billion last April.

The strength of the peso also comes ahead of the release of the latest inflation figures in the United States, with markets expecting a further easing to 6.5% in December from the 11-month low of 7.1% in November.

“The peso also stronger after recent signals of +0.25 or +0.50 local policy rate hike, too early to talk about a possible pause in local policy rate hikes in 2023,” Ricafort said in a mobile message.

BSP Governor Felipe Medalla in December said the central bank is set to continue hiking key policy rates by at least 25 basis points in its first two meetings of 2023.

“Market sentiment also supported recently by further easing of COVID restrictions in China especially since December 2022,” Ricafort said, but noted that this was offset by the resulting spike in cases which could slow down economic recovery.—LDF, GMA Integrated News