Peso up on last trading day of 2024

The Philippine peso closed on a strong note Friday, December 27 —the last trading day of the year— amid monetary interventions to keep the local unit from falling below the historic low of P59:$1.

The local currency gained 12.5 centavos to finish at P57.845:$1 from Thursday’s P57.97.

Year-on-year, the peso lost P2.475 of its value against the greenback when it closed at P55.37:$1 on December 29, 2023 —the last trading day of last year.

In a commentary, Rizal Commercial Banking Corp. chief economist Michael Ricafort said that the local currency had already improved P1.155 from its record-low finish of P59:$1 seen last December 19, 2024.

“It is important to note that the record [low] of 59.00 has been respected for more than two years already or since the latter part of September 2022,” Ricafort said.

The RCBC economist added that moving forward the performance of the Philippines peso against the US dollar “would still be partly a function of intervention/defense as consistently seen for more than two years already” amid “the need to better manage inflation and inflation expectations to fulfill the price stability mandate that would also require stability in the peso exchange rate, which affects import prices/costs and overall inflation.”

To recall, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona said that the central bank is intervening in the foreign exchange market when the peso is “under stress.”

Ricafort, nonetheless, said the peso’s weakness seen in the past few months could be attributed to the seasonal surge in OFW remittances and conversion to pesos for holiday-related spending which could extend towards the New Year celebrations.

He added that the local currency’s strength was also supported by recent signals from the BSP about being open to another rate cut in its first rate-setting meeting in 2025.

For 2024, the central bank has so far slashed monetary policy rates by a total of 75 basis points, following the 25-basis-point cut in its December meeting which was preceded by the 25-basis-point cuts in August and October. — RSJ, GMA Integrated News